Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — ENVIRONMENT

House Building

Mr. Ovenden: asked the Secretary of State for the Environment what is his estimate of housing completions and starts in the public sector for 1978.

Mr. Watkinson: asked the Secretary of State for the Environment if he remains satisfied with level of investment in house building in the public sector.

The Secretary of State for the Environment (Mr. Peter Shore): About 200,000 public sector homes are under construction in Great Britain, which should lead to about 150,000 completions, of which roughly 132,000 will be in England, in 1978. We have made provision for a public sector programme of 137,000 starts in England in 1978. I am acting to encourage the full use of the housing expenditure provision.

Mr. Ovenden: Is my right hon. Friend aware that many Labour Members regard with some degree of pride the contribution that the Government have made to tackling the housing problem, especially the fact that 130,000 more houses have been completed in the public sector in the past three years than were completed during the last three years for which the Conservative Government were responsible? However, in view of the start figures in the public sector and the disappointing figures so far this year, does he think that it is time to take some drastic action to ensure that the Government's record is maintained? What action will he take against the Tory authorities that refuse to build in the stress areas?

Mr. Shore: The problem with public sector starts is a serious one, at least as regards last year. As I have said, we shall be taking measures to encourage local authorities to avoid what appears to be one of the principal problems, namely, slippage during the past year. It is true that the great majority of local housing authorities are not now under Labour control. That means that housing programmes are greatly influenced by the policy decisions of local housing authorities. If the local leaders of Conservative councils have listened to advice from the Opposition Front Bench, we shall not get the number of houses that we need.

Mr. Watkinson: Will my right hon. Friend be a little more explicit about the acute problem of underspending? Is his Department monitoring the problem closely? Is it possible for funds to be rapidly switched to other areas when authorities will not spend? Is he keeping under review the number of authorities that he designates as stress areas? Will he consider other areas, such as the Forest of Dean, in my constituency?

Mr. Shore: We have moved on a bit from the rather rough and ready stress area and non-stress area approach that I introduced in the summer of 1976. We have moved on to the new housing investment programme and policy approach that begins to try to assess the needs of individual authorities instead of the rather crude provision that we had before.
We are watching closely and monitoring the progress of local authorities. Wherever there is the possibility of switching from one authority to another, we shall make use of that power.

Mr. Rossi: In view of the figures that have been bandied about on the Labour Benches, will the right hon. Gentleman confirm that, comparing 1971–1973 with 1974–76, starts were down by about 122,500, the greater percentage of those being in the private sector and not the public sector? Will he inform the House what was his estimate at this time in 1977, and what was the actual outturn? What does he regard as being responsible for the discrepancy?

Mr. Shore: When we took office in the beginning of 1974 there was the almost total collapse of private sector building.


The reason was well understood, and nobody had any doubt about it. The reason was gross financial mismanagement, leading to a total famine of building society money. The situation was so bad that we had only 100,000 private sector housing starts, the lowest figure since the early 1950s. That was the result of the failure of the Conservative Party. There has been a substantial increase in the public sector housing programme in the past three years, in terms of completions, as compared with the three or four years of Conservative Government.

Mr. Frank Allaun: Is my right hon. Friend aware that despite the desperate shortage, council house building has been more than halved in areas that are now controlled by Conservative councils, such as Birmingham, Leeds, Nottingham, Leicester and Liverpool, which is controlled jointly with the Liberals? The notorious Tameside authority has not built a single house. Will my right hon. Friend intervene and get tough with these authorities? Will he do something about it?

Mr. Shore: I very much deplore, of course, the cut-back on policy grounds in local authority house building below the levels which we have been able to allocate to local authorities. I regret it all the more in areas in which there are actual clear shortages of rented housing.
As to what I can do, there is the whole problem of the relationship between central Government and local government. Unless my hon. Friends want to encourage me to repeat the errors of the Conservative Party and put commissioners into the town halls of England, which I do not intend to do, there are obvious limits to what I can do. However, I shall do all that I can with persuasive powers and the use of the Housing Corporation to help to deal with that problem.

Mr. Rossi: Will the right hon. Gentleman stop distorting the figures and confirm that private starts last year were 60 per cent. down on the last year of the Conservative Administration? Will he now answer my question regarding the deplorable result of 1977 in both sectors?

Mr. Shore: I do not accept that. We completed just over 300,000 houses last year, which is very much the same

number as we completed in 1976 and 1975—

Mr. Rossi: The worst record for 15 years.

Mr. Shore: —to the great benefit of our people. It was over 300,000 houses. That is not bad. I should like us to do better, but I am not at all ashamed of the achievement that we have had.
As for the hon. Gentleman's arithmetic, it is a waste of time to try to deal with his carefully selected figures.

Several Hon. Members: rose—

Mr. Speaker: Order. I must now appeal to the House for shorter supplementary questions. I know the overwhelming temptation, but it is always good to resist it if possible. We shall not reach Question No. 12 if we do not move faster.

Construction Industry

Mr. Knox: asked the Secretary of State for the Environment what further measures he is taking to improve confidence in the construction industry.

The Minister for Housing and Construction (Mr. Reginald Freeson): In addition to the £800 million extra public expenditure up to 1980, announced previously, the measures that my right hon. Friend the Chancellor of the Exchequer announced yesterday will benefit the construction industry by about £100 million of public expenditure. The investment incentives for hotels and agricultural buildings will generate further new work. The industry will also benefit from the changed tax arrangements for small firms. The tax relief for partners in consulting firms resident here and working abroad will benefit the industry also.

Mr. Knox: Is the Minister aware that the lack of confidence in the construction industry means that not enough young people are entering into apprenticeships and that in the future the consequent shortage of skilled workers in the industry will put very serious constraints on its capacity to expand?

Mr. Freeson: I make two points in answer to the hon. Gentleman. First, in the midst of a major recession such as that through which we are going, one is obviously very seriously concerned about


job prospects, which influence the intake of apprentices. On the other hand, it has to be said that in view of the very grave difficulties that the industry has experienced in the past three or four years, the maintaining of the standards and the numbers of apprentices training in the industry are very commendable.

Mr. Hardy: Is it not the case that many Conservative-controlled local authorities—unfortunately, they are in the majority—are deliberately refusing to build and are spending well below Government limits, which they then use as an excuse, whereas some local authorities, such as Rotherham Borough Council, have been able to maintain an admirable programme, to the benefit of many of those whom I represent and of the construction industry? Will my right hon. Friend ensure that the commendable are commended and the irresponsible criticised, if only to ensure that the building industry maintains efficiency?

Mr. Freeson: I certainly accept the general point that my hon. Friend makes. Along with my hon. Friend the Under-Secretary, I shall be meeting housing authorities around the country during the coming months to discuss their housing investment programmes, the problems that they have had and the weaknesses of their programmes and policies as we see them. I hope that as a result of this and other contacts that we have with them, those authorities which have decided to cut back unnecessarily and wrongly will decide to make good their programmes. This also is an important contribution to maintaining construction industry activity and the levels of apprenticeship intake.

Mr. Emery: Does the Minister realise that the construction industry expected a much greater incentive from the Budget yesterday, and that the announcements made would not be adequate even for the South-West to correct the unemployment problem there? Why has the Minister had so little influence on the Chancellor in terms of giving greater assistance to the construction industry?

Mr. Freeson: I am not sure that the hon. Gentleman could have been paying close enough attention either to the statement yesterday by my right hon. Friend the Chancellor or, indeed, to previous announcements that have been made by

him and by my right hon. Friend the Secretary of State for the Environment. As I have already indicated today, there has been a major financial input into the industry—now well over £800 million. We want to see that expenditure taken up. That is the issue that is being put to me now. I urge the hon. Gentleman and his colleagues to get in touch with their friends in local government to ensure that the programmes are taken up and that the construction industry is maintained at as high a level as we can provide resources for.

Mr. Kilroy-Silk: Does my right hon. Friend accept that the Knowsley Metropolitan District Council has the worst housing problem in the country, that it also receives less financial assistance from the Government than is the national average, and that it also happens to have a large number of unemployed construction workers? Does he accept that he could deal with both of these problems together and make a very valuable contribution to providing employment on Merseyside and dealing with the real housing problems of Knowsley if he were far more generous with financial assistance to the council?

Mr. Freeson: My first comment on that is that the North-West Region had by far the biggest increase of the whole country in resource allocation for 1978 and onwards. If there are individual authorities that feel that the deployments of the regional budgets that we have made available have not assisted them properly, they are certainly welcome to get in touch with my Department and, indeed, with myself, and we shall do what we can during the course of the year to assist them to maintain the building and rehabilitation programmes to which they have set their minds.

Mr. Alison: What efforts did the Minister or his right hon. Friend make to try to persuade the Chancellor not to raise minimum lending rate? Or does the Minister think that the increase in MLR will help to bring forward more orders for the construction industry?

Mr. Freeson: As the hon. Gentleman well knows from his own experience, we do not debate at Question Time, across the Floor of the House, the internal discussions that take place in Government.
On the general point, I would not expect the announcement made yesterday with regard to MLR to have any significant effect on the construction industry. Certainly I would not expect it to have any effect on mortgage rates—a subject which has been mentioned in the media.

Derelict Land

Mr. John Evans: asked the Secretary of State for the Environment what new initiatives he intends taking to encourage local authorities to reclaim derelict land.

Mr. Shore: I am giving serious consideration both to how we can improve the ways in which we tackle the problem of derelict land, especially in inner city areas, and—together with my right hon. Friend the Secretary of State for Industry—to the possible extension of the list of derelict land clearance areas—to which 100 per cent. grants are made available. I have made a special allocation of £4 million in the current year for the reclamation of derelict land in inner cities.

Mr. Evans: I am grateful to my right hon. Friend for that reply. Will he confirm that there is plenty of money available from central Government for local authorities in all the assisted areas for the purpose of clearing derelict land? Will he confirm that there is no hold-up in Whitehall with any confirmations of schemes? Does he agree that it really is up to local authorities to get on with this job and clear up this eyesore on the face of North-Western England?

Mr. Shore: I am not sure that I could say that there is plenty of money available. We still have a very major problem with derelict land and reclamation. We must proceed with it and get rid of the worst areas as quickly as we can. But it is true that there has not been the take-up in, I think, the last two years of the amounts that have been allocated. I very much hope that authorities will come forward with their programmes this year.

Mr. Arthur Jones: On the question of restoration of mineral workings generally, is consideration still being given to the advisability of the introduction of restoration funds, such as for the iron ore workings, in order that some surety can be brought to the restoration of mineral workings, both those existing and those for which planning permission will be forthcoming in the future?

Mr. Shore: The question of mineral workings is a complex one, on which we have had a major report. That is still being studied in the Department, but I will consider the hon. Gentleman's question and be in touch with him later.

Mortgages

Mr. Newton: asked the Secretary of State for the Environment what discussions he had with the building societies prior to their decision to reduce mortgage lending by 10 per cent. a month between 1st April and 1st June 1978.

Mr. Shore: I personally met representatives of the Building Societies Association to discuss house prices and mortgage lending, and of course my Department is in regular contact with the association on this and other issues.

Mr. Newton: Is the right hon. Gentleman aware that inquiries that I have made in my own area confirm that the first casualties of this policy have been the very people—the potential first-time buyers—that the right hon. Gentleman claims to be trying to help through other policies, and that large numbers of them are now unable to get the mortgages that they would like? What will he do about this, to reintroduce some consistency into his policies?

Mr. Shore: I find that a remarkable question. I can think of no way in which the interests of first-time purchasers would be more damaged than by allowing just the kind of house price boom that we had in 1972–73. I remind the hon. Gentleman that the arrangements to regulate or generally to even out the flow of building society lending in respect of prices through the joint advisory committee of the Government and the building societies was introduced very late in the day by the hon. Member for Birmingham, Hall Green (Mr. Eyre) in the last few months of the last Conservative Government.

Mr. George Rodgers: When my right hon. Friend meets representatives of the building societies, will he tell them that he sees no necessity at all for any increase in lending rates as a consequence of the Budget?

Mr. Shore: I do not see any need for a change in building society lending


rates as a result of the Chancellor's movement on MLR. However, the House knows that minimum lending rate and building society rates bear a very inexact relationship to each other. We have had many more movements of MLR than of building society rates in recent years.

Mr. Stephen Ross: Is the right hon. Gentleman aware that the construction industry as a whole believes that the building societies' action has had a steadying influence on the increase in house prices?

Mr. Tebbit: That is not true.

Mr. Ross: Yes, it is: I have just been talking to representatives of the industry.
Is the right hon. Gentleman, aware, however, that it need not be extended, and that it should finish at the end of July?

Mr. Shore: I believe that no one in the House would wish to see an unnecessary explosion of house prices. I hope that our measures will have a steadying effect. It is a moderate cut-back, and of course we shall review the situation with the building societies towards the end of the second quarter.

Liverpool Partnership Committee

Mr. Loyden: asked the Secretary of State for the Environment when he next expects to meet the Liverpool Inner Area Committee; and if he will make a statement.

Mr. Shore: I chaired the last partnership meeting in Liverpool on 10th March and I expect to chair a further meeting in June or July.

Mr. Loyden: Is my right hon. Friend aware that much of his effort to salvage the neglect of one hundred years in the inner areas is being frustrated by the closures and redundancies declared in the private sector, particularly on Merseyside? Will he not now take the opportunity to accelerate any programme for the development of community co-operatives in that area to fill the vacuum left by the collapse of the private sector?

Mr. Shore: I am very much aware of the many heavy blows sustained on Merseyside, in terms of jobs, through firms closing during the past few months. Any measures that we can help with will be

taken. Merseyside already has the highest possible priority as a special development area. I have no doubt that my right hon. Friend the Secretary of State for Industry, along with myself, will want to consider any further proposals of the kind that my hon. Friend has made. However, in the terms of the partnership arrangements with Liverpool, I believe that we must go ahead with the efforts that we have just started there to make the city itself a much more attractive place than it has been in recent years for people to live and work in.

Mr. Grimond: Is it the case that this committee met only once before March? If so, is the Secretary of State satisfied with these rather infrequent meetings? Is he, indeed, satisfied in general with the progress made with his whole policy on inner cities?

Mr. Shore: I think that I declared the partnership offer to Liverpool less than a year ago. We had the first meeting with the Liverpool partnership probably only six months ago. I do not think that we should be in monthly session with the partnership committee. That would be unnecessary and would generate an unnecessary amount of work. However, I think that we need to meet perhaps three or four times a year. The major task for Liverpool at the moment is to draw up its programme for the first three years of a rolling programme for inner city revival. That is what the council is engaged upon, with our help.

Mr. Heffer: Is my right hon. Friend aware that although we warmly welcome the attitude that he and his hon. Friends have taken to Liverpool, the Liverpool City Council has called a special meeting for tomorrow, on unemployment, and that I understand that it will be drawing up plans which could lead to proposals for the modernisation and the speeding up of the modernisation of both private and council property? Will my right hon. Friend look sympathetically at the sort of ideas that the council has to bring down unemployment?

Mr. Shore: I assure my hon. Friend that my Department is anxious to do whatever is possible to help Liverpool. We have increased the housing allocation for Liverpool in cash terms this year by


44 per cent., which is very high compared with other areas. We are of course, through the rate support grant, making a substantial contribution to the finances of the city of Liverpool. In addition, as my hon. Friend knows, there is a big PSA building programme of major offices in the city. But we shall look at suggestions.

Home Ownership

Mr. Tim Smith: asked the Secretary of State for the Environment what measures he is taking to increase the opportunities for home ownership.

Mr. Hal Miller: asked the Secretary of State for the Environment what measures he is taking to increase the opportunities for home ownership.

Mr. Montgomery: asked the Secretary of State for the Environment what steps he is taking to increase house ownership.

Mr. MacKay: asked the Secretary of State for the Environment what further steps he is taking to increase house ownership.

Mr. Shore: The Bill to provide loans and savings bonuses for first time purchasers completed its Committee stage yesterday. In 1977 more mortgages were committed than in any previous year and I expect that in the first half of this year there will be a substantial increase over the equivalent period of 1977. The many other constructive steps we have taken and are proposing to take are set out in Chapter 7 of the Green Paper on housing policy. The many other constructive steps we have taken, and are proposing to take, are set out in Chapter 7 of the Green Paper on housing (policy) (Cmnd. 6851).

Mr. Smith: Although the news about mortgages is obviously welcome, does not the right hon. Gentleman agree that we can now increase home ownership substantially and meet the aspirations of many council tenants only by selling to those tenants who wish to buy their homes?

Mr. Shore: No, Sir, I do not think that at all. Most certainly I do not think so in respect of those areas where there is an obvious shortage of rented

housing. I do not see how that will help anyone. Nor do I think that it will be impossible for people who wish to buy houses in those areas to do so.

Mr. Speaker: I propose to call first those hon. Members whose Questions are being answered with No. 6.

Mr. Miller: In connection with the opportunity for tenants of council houses to buy their homes, will the right hon. Gentleman look again at the restriction that those houses should not be sold below cost? Houses built since I have been in the House, at a cost of £16,000, now have a market value of £10,000. It is effectively impossible for the people concerned to buy their own homes, although they are being subsidised at the rate of £40 a week. Will he look again at this matter to see whether a time limit can be introduced to allow these people to buy at a different rate after that time?

Mr. Shore: I see great difficulties in any proposal that public sector property should be sold below cost. There may be exceptional circumstances that the hon. Gentleman has in mind, but, in general, that would break all the rules of audit and public accounting responsibility.

Mr. Montgomery: Will the right hon. Gentleman explain why it has taken the Government about three years to bring forward a measure to help home buyers? Does this explain the rather inadequate proposals in the Home Purchase Assistance and Housing Corporation Guarantee Bill? Will he take note that every opinion poll shows that the overwhelming majority of people want to own their homes, not to rent them? Will he look again at the question of allowing sitting tenants to buy their council houses, as that would give a tremendous boost to home ownership?

Mr. Shore: No, Sir. The matter is perfectly well established. But I must tell the hon. Gentleman that in the post-war period there have been at least 16 or 17 years of Conservative rule, and people had to wait until the Labour Government introduced a specific measure to help first-time purchasers only a few months ago.

Mr. MacKay: Is the Secretary of State aware that, due to his Government's artificial control of mortgages, many potential


first-time house buyers will not now be able to buy their homes? Is he further aware that his earlier statement that this would control prices is barking completely up the wrong tree, and that we shall have a position where first-time buyers will not be able to buy, and prices will continue to rise?

Mr. Shore: I really think that the hon. Gentleman has misunderstood the whole strategy that not only I pursue but that the Conservative Government also pursued in their last days. The greatest damage would be done to first-time house purchasers if we were to have an uncontrolled take-off of house prices. I said earlier that last year we had a record number of mortgage transactions—over 780,000. The nearest we ever came to that figure before was in 1972, at a time when house prices were going up by 35 per cent. Last year we achieved the figure of over 780,000 at a time when prices were going up, overall, by 8 per cent. We believe that we can get a satisfactory take-up of mortgage transactions without a great upsurge of house prices.

Mr. Andrew F. Bennett: Is my right hon. Friend aware that in the Stockport area one estate agent is allowing several would-be purchasers of a house to believe that they have purchased the house and to start drawing up contracts and incurring expenditure in regard to solicitors? Does he not deplore this practice, and will he refer it to his right hon. Friend the Secretary of State for Prices and Consumer Protection? Does he not agree that it should be made absolutely clear that it is disgraceful for an estate agent to raise the hopes of several would-be purchasers that they have bought a particular house?

Mr. Shore: That does not sound to me to be the kind of behaviour that anyone would wish to condone. If my hon. Friend will give me the particulars of the case that he has in mind, I will consider them, perhaps in conjunction with my right hon. Friend the Secretary of State for Prices and Consumer Protection.

Mr. Greville Janner: Reverting to the question that my right hon. Friend was asked about the sale of public sector housing at below cost, is he aware that many of us are against the sale of public sector housing al any cost when there is

a waiting list for houses? Does he agree that the public sector housing represents the main hope of homes for those who need them most?

Mr. Shore: Of course, that is the general view that we have, that where there is a substantial shortage of rented housing it really is imprudent—indeed, silly—to embark upon programmes of substantial council house sales. We have made that view clear from the beginning.

Mr. Michael Morris: Why does not the Secretary of State understand that it is the young married people who will be affected by the cut-back in building society mortgages? Would it not be more politically honest if he were to seek legislation to control mortgages? Then we would all know where we are.

Mr. Shore: Enemies of the first-time house purchasers, the young couples, are those who would simply leave increases in house prices unrestricted, fuelled by an unending supply of building society money. We recall the days of the hon. Gentleman's Government, when secondary banks and other financial interests were involved.

Mr. John Evans: Does my right hon. Friend accept that selling council houses will not add one brick to the housing stock? Does he further accept that this has more to do with Tory mythology than with good housing practice?

Mr. Shore: Yes, Sir. I very much regret that so much ideology has gone from the Conservative side into the whole question of houses to rent and the sale of them to their tenants.

Home Improvement Scheme

Mr. Kilroy-Silk: asked the Secretary of State for the Environment if he is satisfied with the operation of the home improvement scheme.

The Under-Secretary of State for the Environment (Mr. Ernest Armstrong): I should like to see better progress generally, accompanied by a greater switch of resources to deal with the worst of the improvable houses. The alterations in the grants structure proposed in the housing Green Paper are designed to help in achieving these objectives.

Mr. Kilroy-Silk: Does my hon. Friend agree that, welcome though the


extension of the scheme has been, it has not helped the large number of people who live in the most inadequate of housing, such as those of my constituents in Ormskirk and Lathom, who do not have main drainage or main sewerage and are not able to take advantage of the home improvement scheme?
Does my hon. Friend accept that there is a need to extend the scheme to cover these basic amenities, or, indeed, to provide resources from the Government so that people can get drainage and sewerage mains fitted before they go on to make improvements with the aid of the home improvement scheme?

Mr. Armstrong: I am most anxious to help those who live in houses in conditions which most of us would find completely unacceptable, and to see that resources are directed to the houses in most desperate need, in order to rescue them. I take on board what my hon. Friend says and will certainly have a look at the position.

Mr. Sainsbury: Is the Minister satisfied that the public expenditure White Paper envisages a decline in expenditure on home improvement in the next two years? Would it not be more sensible to divert expenditure from programmes such as municipalisation in order to help with rehabilitation and home improvement?

Mr. Armstrong: If the hon. Gentleman will look carefully at the White Paper on cash limits, and so on, which was issued yesterday, he will find that that is not correct. I would regard as a very worthwhile exercise in public expenditure the diversion of resources to the houses that are really in most desperate need of the basic amenities from a social point of view, giving families a chance to live in decent conditions, as well as rescuing old houses and preventing them from becoming slums.

Mr. Edwin Wainwright: Will my hon. Friend, in spite of what the Government have done for the first-time home buyer, do something about the young couple who buy very old property and find that they have great difficulty in getting a second option mortgage when they want to improve that property? Will he do more for them than he is doing at the present time?

Mr. Armstrong: This, indeed, is one of the aims that we had in our proposals for repairs, and so on. These are the very people who would be helped most.

Mr. Rossi: Will the Minister consider complaints that are now being received that the qualifying rateable value levels are far too low and exclude many people who would like to improve their own homes? Does he agree that the conditions and restrictions imposed by some local authorities—in particular, in respect of additional works to be done to houses—while they may be a counsel of perfection are nevertheless unrealistic and deter many people who have not the extra money?

Mr. Armstrong: The cost limits and rateable value limits have been raised recently, but we are anxious to make sure that resources go where they are most desperately needed. We continually review these matters, as we do the attitudes of local authorities, but it is not for us to dictate. We make suggestions from time to time that more flexibility should be accepted.

Housing (Investment Programmes)

Mr. Joseph Dean: asked the Secretary of State for the Environment what are the housing investment programmes for 1978 for the six largest metropolitan districts, and the metropolitan districts in West Yorkshire; and if he will give any information that is available to him regarding the size of the respective waiting lists of the local authorities.

Mr. Armstrong: Tables showing authorities' bids and allocations for 1978–79 have already been placed in the Library of the House. Information about local authority waiting lists is not collected centrally. I invite my hon. Friend to seek this information from individual local authorities.

Mr. Dean: Is my hon. Friend aware that the Conservative-controlled authority in Leeds has cut back its house building programme from 1,750 to 1,250, despite having a waiting list of 20,000, and that the local politicians running that authority are laying at the Government's door the blame for lack of financial resources?

Mr. Armstrong: We are in negotiation with the Leeds authority. My


regional officers are now talking to that authority about specific schemes. We have said that where there is any hold-up, the authority should have other schemes ready to bring forward.
We are also discussing the allocation of resources, because we believe that we have provided for housing for a large and continuing programme. That is certainly our aim, and we want to help Leeds to achieve good housing success.

Mr. Alison: Is the Minister aware that Leeds citizens and ratepayers have never had a better deal than under the Tory leadership which has been there since 1975? Does the Minister recognise that the Government themselves have allocated only two-thirds of the housing investment programme grant for which application was made?

Mr. Armstrong: In fact, the allocation was increased this year. We are now asking the Leeds authority for details of any schemes which it says it cannot bring forward. I suggest that the other matters that the hon. Gentleman raised are more appropriate to the hustings.

Housing Land

Mr. Tim Renton: asked the Secretary of State for the Environment how much land has been released for housing development in England, Scotland and Wales since the Community Land Act came into force.

Mr. Freeson: I am not sure what the hon. Member means by "released". There is enough land with planning permission for about six years' house building at present rates.

Mr. Renton: Is it not quite clear that what is meant by "released" is what has actually been made available from the local authorities for development? Is not the Minister frightened to give the answer because the statistics to date are absolutely appalling and pathetic? Is it not a fact that the Community Land Act, in terms of results, is proving the most expensive and disastrous venture by a Labour Government since the groundnut scheme?

Mr. Freeson: The hon. Gentleman may be confusing a number of Acts, ownerships of land and different sets of statistics, which he has not specified. The plain fact is that there is land available

for house building on the scale to which I have referred. I have indeed recently met the House-Builders Federation, not for the first time, to discuss among other things land supply questions. I have invited the federation to identify, so far as it is able, specific areas where there are problems as it sees them. I shall be glad to pursue those problems. What is more, I shall be glad to advise local authorities—including the hon. Gentleman's own local authority—to buy land through CLA powers where local shortages are evidenced to me by the house builders.

Mr. Frank Allaun: Is the Minister aware that many of us want to thank him for the recent circular, which goes some way to making good the lack of application of the Community Land Act? There is a long way to go. In particular, will he ensure that land which has been disused for 10 years or 20 years, perhaps in dockland, is valued at its current use value—which is nil—and not at £20,000 or more, which is what is being asked for in many cases?

Mr. Freeson: On the latter point, I do not think that I can give a quick answer on valuation questions in that way. I do not think it would be correct to say simply and generally that all land which is at present disused, and has been disused for some time, is necessarily without value, any more than other disused objects—which have had a value in the past—would have a nil value today in such circumstances. It is rather more complicated than that.
On my hon. Friend's general point, I certainly agree with him that there is underused resource. There are local problems about land supply. I shall be glad to advise and have contact with local authorities which are in need of making land available if house builders supply the information—which I believe they will be doing shortly—as a result of my own contact with them.

Mr. Rifkind: Has not the Minister by his evasive answer in effect confirmed that all of the claims made during the passage of the Community Land Act were virtually groundless? How long is genuine development throughout the United Kingdom to be frustrated by the permanence of this legislation on the statute book?

Mr. Freeson: The simple answer to the hon. Gentleman's question is "No". The general answer is that he is talking without knowledge of the operation of the Act.

Mr. Renton: On a point of order, Mr. Speaker. In view of the totally unsatisfactory and evasive answer to my Question, I give notice that I shall seek to raise the matter on the Adjournment at the earliest possible opportunity.

Rented Accommodation

Mr. Viggers: asked the Secretary of State for the Environment if he is satisfied with the level of availability of privately rented accommodation in areas where there is a high proportion of residents in the armed services.

Mr. Armstrong: The decline in private renting—and the corresponding increase in renting from social landlords—has been a country-wide phenomenon. I have no evidence that it has been especially significant in garrison towns.

Mr. Viggers: Is the Minister aware that families in the armed services have traditionally relied upon the availability of short-term lettings? Is he aware that the Government's legislation has made it difficult for house owners to let their houses and has caused vicious hardship to those who wish to take private lettings?

Mr. Armstrong: We have no evidence that that is the case. The Government have given very positive direction to local authorities about the difficulties for Service men, which we fully understand. This was also included in the Housing (Homeless Persons) Act, which went through the House last Session. We are well aware of the difficulties, but I do not accept at all the alegations that the hon. Gentleman has made about the Rent Act legislation.

Mr. Tebbit: What does the Minister mean by "social landords"? Is he referring to the landlords of some of those vast, derelict council estates whose tenants cannot wait to get out of them or, alternatively, to move into private sector accommodation and buy wherever they can?

Mr. Armstrong: Yes, indeed—[HON. MEMBERS: "Oh".] I do mean the public

sector. There are thousands of families in this country who are dependent on the public sector and who are well satisfied with the contribution made by local authorities throughout the country. The attack on public sector housing does the hon. Gentleman no credit at all.

Rent Restriction

Mr. Ridley: asked the Secretary of State for the Environment whether he has yet completed his review of the future of rent restriction of lettings.

Mr. Freeson: No, Sir.

Mr. Ridley: Is the Minister aware that one of the 12 conditions for the Liberals' support of the Government was that furnished lettings restrictions should be abolished? Is the reason why the Minister has not done this the fact that the Liberals have not pressed it, or is it that he has simply refused to listen to what they said?

Mr. Freeson: I would have to check the record on that point and, no doubt, consult the hon. Member for the Isle of Wight (Mr. Ross) and others in order to pursue it. But the original Question asked whether we had completed the review of the Rent Acts. The answer is "No".

Mr. Durant: Has the Minister had a recent meeting with the National Union of Students to talk about rent restriction in respect of student accommodation in places like Reading, where, at the beginning of the last year, about 114 students had to sleep on the floors of various halls because of the lack of accommodation?

Mr. Freeson: I have had no such proposals by the NUS generally or by the Reading branch of the NUS specifically. It is the experience over many years that at the start of the academic year there are residual difficulties concerning a relatively small number of students first entering university. On past experience, these problems are overcome in a matter of weeks or months—very shortly after they are experienced. On the question of security of tenure, the NUS takes the same position as that which the Government take. I have had no subsequent views expressed to the contrary by the NUS.

Mr. Rossi: Will the Minister indicate when he will complete his review and when he will publish his findings, in view of the continuing hardship being suffered by landlords and tenants alike as a result of this legislation, as the Government's own consultative document acknowledges?

Mr. Freeson: I do not think that I can give a date now, nor would I accept the implied exaggerated view that we constantly have from the hon. Gentleman about the operation of the Rent Act 1974, which he has been challenging, criticising and attacking for the past four years but which he did not vote against when it was before the House.

Mrs. Wise: Is my right hon. Friend aware that students will very much resent the clumsy attempts from the Conservative Benches to use their housing needs as an excuse for the general pushing up of rents and an attack on other people's circumstances? Is he also aware that students have no wish at all to be used as pawns in this way and that they support the Government in this matter?

Mr. Freeson: My hon. Friend is perfectly correct. At a much earlier date the NUS expressed fully and clearly to me its views in support of our general legislative position on security of tenure. Since then I have made efforts, in conjunction with the housing association movement, the NUS and local authorities to get a wider provision for single person housing in order to assist students, and others in a similar position, with their housing. This is beginning to produce results around the country. There is a much greater variety of provision for single people such as students by both housing associations and local authorities. I hope that this will continue to expand.

Thermal Insulation

Mr. Rost: asked the Secretary of State for the Environment if he is satisfied with progress on the improvement of thermal insulation on the nation's public and private buildings.

Mr. Shore: Further energy saving measures were referred to by my right hon. Friend yesterday in the course of his Budget Statement.
To promote the insulation of the private housing stock, I intend shortly to introduce legislation providing for a scheme of grants to private householders in respect of specified basic insulation measures undertaken under the scheme. The scheme will be brought into effect as soon as possible after the legislation is passed. Grant will be at the rate of 66 per cent. of certified expenditure, subject to a maximum grant of £50. Local authorities have agreed to administer the scheme: discussions are taking place with the local authority associations on the details. The scheme will be kept as simple as possible. This is of course in addition to the measures announced on 12th December by the Secretary of State for Energy for local authority housing.

Mr. Rost: While welcoming the Government's belated recognition that many owner-occupiers are just as much in need of assistance with their insulation as council house tenants, may I suggest that the Secretary of State for Energy should not have excluded them and discriminated against them in the first place? Would the Minister tell us the maximum grant available under the scheme? Will it provide for adequate insulation, rather more so than the scheme that provides inadequate insulation for council house tenants?

Mr. Shore: I do not accept that the intention was ever discriminatory. We had to think through the arrangements to assist people in the private sector as well as in the public sector, and only three or four months have separated the announcement of the local authority measures and those that I have just announced today relating to the private sector. What we are offering is basic insulation of the kind that most people think is worth doing—insulation of loft spaces, lagging of water tanks and also of pipes in the loft space. The maximum amount available is £50, or 66 per cent. of the cost, whichever is lower.

Mr. Spriggs: Does my right hon. Friend agree that the most effective thermal insulation can be provided by the use of double of even triple glazing? What steps is he prepared to take to encourage the use of double glazing?

Mr. Shore: I am aware that substantial savings can be made with double glazing as with other ways of saving heating in


houses. But the sensible thing for us to do when millions of houses in this country are almost totally uninsulated is to get on with the job of saving energy in the most cost-effective way. That is what we propose.

Mr. Michael Latham: Has the Secretary of State talked to any builders lately about the £50 figure? Such a piffling amount would not insulate one-quarter of a loft.

Mr. Shore: There is no difference between those figures and the sums that we indicated for the local authority housing programme. I do not think that I agree with the hon. Member. It is the experience of most people that relatively small measures of insulation—of loft space, water tank lagging, and pipes leading up to the loft—are very cost-effective and inexpensive to carry out.

Mr. Rost: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that answer, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest possible opportunity.

Co-operative Housing

Mr. Ioan Evans: asked the Secretary of State for the Environment what further action is proposed to encourage the development of co-operative housing.

Mr. Freeson: I believe that co-operative housing is a vitally important part of social housing in this country. Since our initiative in legislation under the Housing Subsidies Act 1975, and in the setting up of the Co-operative Housing Agency shortly afterwards, about 150 co-operative schemes have come into the pipeline, round the country. I am examining further the proposal in our housing policy area paper for establishing a right to collective purchase by private tenants in certain circumstances. I have also asked the Co-operative Housing Agency to report to me on the possibility of establishing a distinctive co-operative tenure by statute.

Mr. Evans: I thank the Minister for that encouraging reply. Will he continue to encourage the work of the Co-operative Housing Agency and remove any opposition to the development of co-operative housing in this country? If necessary, will

he consider bringing forward a co-operative housing Bill in order to meet the housing needs of the people, as well as those of local authority-occupied property? This could play an important part in our housing programme.

Mr. Freeson: Certainly I believe in co-operative housing. I have done so for many years—long before coming to this place. I believe that it should become an important part of social development in this country. Certainly I shall consider the possibility of legislation in due course. That is why I have invited the Co-operative Housing Agency, which has done commendable work in the short time that it has existed, to submit a report on the problems and needs of legislation in this field.

Mr. Sainsbury: Is the Minister aware that he is liable to damage this valuable movement if he insists on referring to it as a form of social ownership? Would he give equal encouragement to equity sharing schemes in which many people participate as the first step on the ladder to home ownership?

Mr. Freeson: There are two different kinds of tenure. I do no damage to the co-operative housing movement by referring to it as a form of social tenure. It started out as such many years ago, and my great regret is that it has not expanded as widely in this field as it could and should have done, and as I hope it will do in the future.
I have always encouraged equity sharing. In fact, it was this Government who introduced legislation enabling local authorities and housing associations to embark on such schemes. The previous Conservative Government held out against such schemes and applications for about two years.

Coastal Damage

Mr. Michael Marshall: asked the Secretary of State for the Environment what action his Department has taken to investigate the effects of coastal damage during the last 12 months; and if he will make a statement.

Mr. Shore: Following the recent storms, Ministers and departmental officials visited a number of areas which had been severely affected.
Certain local authorities have submitted schedules of damage to coast protection works and further visits have been made where necessary to assess how much of the repair work qualifies for central Government grant under the Coast Protection Act of 1949.

Mr. Marshall: I thank the Secretary of State for that answer. Will he confirm that the amount of damage in the last 12 months has been exceptional? Will he say when he hopes to come forward with a clearer view of the picture, particularly in relation to the uncertain responsibility of local government and central Government on financial assistance issues?

Mr. Shore: This Question deals with coastal protection, not flood damage. Flood damage comes under a separate Act, and is the responsibility of the Minister of Agriculture. We shall try to get a picture as soon as local authorities inform us of the extent of the damage suffered to the coastline. As the hon. Member may recall from yesterday's Budget Statement, the Chancellor indicated that extra resources would be made available this year, under this legislation, to help deal with the problem.

Mr. Stephen Ross: Will the Secretary of State take account of the idea that some part of the money mentioned in the Budget yesterday—a total of about £20 million—should be allocated to Southampton University, which is doing good work investigating the effect of dredging in the Solent and the English Channel? Certainly it is believed that this is affecting the coastline in the Isle of Wight and other parts of the South Coast. If the scheme can be extended in this way it would be very valuable.

Mr. Shore: I shall consider that matter. Whether it is a departmental responsibility that accrues to me I doubt, but that does not mean that I cannot talk to my right hon. Friend who holds that responsibility.

Gazumping

Mr. Hugh Jenkins: asked the Secretary of State for the Environment what is his policy in considering the approval of compulsory purchase orders by local authorities in relation to properties subjected to gazumping.

Mr. Freeson: There are no powers of compulsory purchase in relation to such properties.

Mr. Jenkins: What does my hon. Frend intend to do about gazumping? Is he aware that the practice is spreading? If he does not intend to make it illegal, will he give local authorities some powers or at least take powers himself to deal with the problem?

Mr. Freeson: There are already fairly wide powers of compulsory purchase as well as powers to purchase properties in particular circumstances. I do not think that, as a general policy, compulsory purchase legislation should be introduced into the question of the negotiation of private sales of properties between individuals. The answer lies in maintaining the kind of stability in the housing market to which we referred earlier today. The Law Commission looked at the legislative aspect and concluded, in a report made two or three years ago, that legislation was not the right way of handling the problem.

Mr. Michael Latham: Any question of increasing the price after the parties involved in a property sale have reached agreement is morally indefensible, but will the Minister continue to tread very carefully and keep to what he has already said? Does he agree that gazumping is the greatest symptom of inflation, rather than the cause of it?

Mr. Freeson: I accept that general principle. It is not just a problem of the seller's asking a higher price after negotiations have been well advanced, so that the buyer withdraws from the negotiations; it can work the other way round in certain circumstances. If one were to legislate, one would have to go against buyers who withdraw from the purchase during negotiations because they decide to take their transactions elsewhere.

Mr. Rossi: Will the right hon. Gentleman consider discussing one of the two following methods with professional bodies concerned in house purchase and sale as a possible means of alleviating the problem of gazumping? They involve either requiring a vendor to deposit with the estate agent replies to preliminary inquiries to local searches and possibly a certificate of structural soundness in order


to narrow the time within which gazumping can take place, so that a willing buyer can enter into a contract quickly and with little risk, or, alternatively, requiring the vendor who withdraws in order to sell to a higher bidder to indemnify the disappointed purchaser for his surveyor's fees and other costs that he may have thrown away in consequence, out of the additional profits that the vendor has made from the higher price.

Mr. Freeson: First, to operate such a system on either count would be highly bureaucratic and, if anything, would slow down the procedure rather than speed it up. I do not think that I can deal with these matters fully by exchanges in Question Time. I shall carefully study the hon. Gentleman's remarks and consider the matter.

Oral Answers to Questions — PARLIAMENTARY PAPERS

Mr. Rost: On a point of order, Mr. Speaker. Last week the Leader of the House said that he would probably make a further statement about the continuing dispute involving the supply of parliamentary papers and their inadequate distribution and supply. Since then some of us have received a letter from the Father of the Chapel implying that the reply made by the Leader of the House last Thursday contained several misleading facts. Could we have any idea through you, Mr. Speaker, whether the Leader of the House has indicated to you that he wishes to make a further statement correcting the previous one and giving us some further information about this continuing dispute and its unsatisfactory nature?

Mr. Speaker: I have not had such a request, but the hon. Gentleman's comments no doubt have been heard by those responsible for dealing with the matter.

SOCIAL SECURITY BENEFITS (UPRATING)

The Secretary of State for Social Services (Mr. David Ennals): I shall, with permission, Mr. Speaker, make a statement about the increases in social security benefits which will come into effect from the week beginning 13th November.
Under the 1975 Act, pensions and other long-term benefits must rise in line with earnings or prices, whichever is greater, and short-term benefits must rise in line with prices. As a result of our success in the battle against inflation, we expect earnings to rise substantially more than prices during the 12 months to November 1978. As my right hon. Friend the Chancellor of the Exchequer has announced, the single person's pension will go up by £2 from £17·50 to £19·50 and the rate for a married couple by £3·20 from £28 to £31·20. The same increases will apply to widows' and invalidity pensions. These are increases of about 12½ per cent. over a period when we expect prices to rise by only 7 per cent. I am satisfied that these increases will be sufficient to meet the statutory requirements. Thus, these new rates will provide a further improvement in the real value of pensions of over 4 per cent.
This will be the sixth occasion on which we have increased pensions since we came into office just over four years ago. Between October 1973, when our predecessors last increased pensions, and November 1978, pensions will have risen by 150 per cent. in cash terms. The real value of the pension will be more than 20 per cent. higher than the pension rates which we inherited. This is proof of the Government's determination not only to protect pensioners' interests but to improve their position in society. This is a remarkable achievement for a period during which this country has faced the biggest economic crisis for over 40 years.
The earnings rule limit will go up from £40 a week to £45.
The graduated pensions which many people earned under the scheme introduced by the Conservative Party in 1961 will be increased by 3·6 per cent. from November. This is in line with the forecast of price increases from this month—the beginning of the new pension scheme.
Short-term benefits for sickness and unemployment will go up by £1·05, from £14·70 to £15·75, for a single person; and for a married couple by £1·70, from £23·80 to £25·50. Maternity allowance and injury benefit will go up by the same amounts. Injury benefit will become £18·50 for the single person and £28·25 for the married man with a dependent


wife. This will fully compensate for the rise in prices since last November.
War and industrial injuries disablement benefits will increase in line with other long-term benefits. For example, the 100 per cent. rate of pension for war disablement and for work injury will go up from £28·60 to £31·90. The additional allowances which can be paid with these pensions will get comparable increases.
Turning now to the civilian disabled; the therapeutic earnings limit, which is applicable to all incapacity benefits, will go up from £10 to £11 a week. The non-contributory invalidity pension, which last November was extended to disabled married women unable to go out to work or do their housework, will go up from £10·50 to £11·70.
I have already announced that the rate of mobility allowance, which was increased to £7 last November, will go up again to £10 in July.
The increase in the main supplementary benefit scale rates will be the same as those of the national insurance benefits to which they are related. They will come into force at the same time. The other scale rates will, of course, also be increased.
In November, the Supplementary Benefits Commission will also increase the discretionary additions for extra heating and for special dietary needs.
My right hon. Friend the Secretary of State for the Environment intends to make appropriate adjustments in the needs allowance for the rent and rate rebate and rent allowance schemes and will be consulting his advisory committee on rent rebates and rent allowances.
The increase of child benefit paid out last week brought the rate up to £2·30 for each child. We are increasing this in April 1979 by £170 to £4. This new rate of child benefit will be reached in two stages, 70p in November and a further £1 in April next year. A mother with three children, who from April 1977 drew £4, now draws £6·90 and from next April will get £12 each week. For the great majority of working families this will be the highest level of support which has ever been provided. One-parent families will also be given extra special help. The £1 premium for the first child

will be doubled next November. Lone parents with one child who now draw £3·30 will, by next April, get £6, and those with two children will get £10 instead of £6·50.
The Family Income Supplement which is payable to working families bringing up children on low incomes will also be included in the November uprating. Detailed proposals will be announced later.
We shall be spending upwards of £1¾ billion next year as a result of the changes I have just announced. The full-year cost of the benefits uprating, apart from child benefit, will be about £1,300 million, and the child benefit cost over £500 million. The 1978–79 cost is about £670 million in total. More precise details of the costs will be made available later.
Any changes in contribution rates for 1979–80 resulting from the review will of course require the approval of Parliament.
For the convenience of the House, I am circulating details of the new rates of benefit in the Official Report and copies will be available in the Vote Office. I shall shortly be laying the necessary draft uprating order under Section 124 of the Social Security Act, accompanied by a Government Actuary's report in the usual way. I shall also be laying a draft order increasing child benefit.
I am sure that the whole House will welcome this further increase we are giving to the living standards of pensioners and greatly increased help we are providing to families with children. The new level of child benefit will substantially reduce the number of people who can be better off on benefit than at work and bring substantial help to that minority of poor families who have been unable to benefit from child tax allowances.

Mrs. Chalker: The Secretary of State will be aware that the Opposition welcome the statement and particularly the increases in child benefit, which are a major part of the Opposition's family policy. May I ask him to clarify one point that he made when dealing with pensioners? He said that the increases were 12½ per cent., but the written copy of his statement alludes to 111½ per cent. We should be grateful for clarification.
May I ask him two further questions on the pension increases? Has he given consideration to the 53-week pension year, which was suggested at the end of last year, to overcome the annual difficulty that we face in requests for a Christmas bonus? Secondly, the right hon. Gentleman will have noted his requirement under the Social Security (Miscellaneous Provisions) Act to review the earnings rule. When may we expect such a review?
The Opposition note the continuing and worrying growth in means-tested benefits. May I ask the Secretary of State what action he and his Department are taking to reduce the dependency on means-tested benefits and thereby to simplify the whole of the British benefits system, which is getting itself into increasing chaos for those who apply and those who have to deal with such applications?

Mr. Ennals: I very much welcome the fact that the hon. Lady has welcomed the statement, particularly the boost for child benefits. I thought that she might have done it with a little generosity and that her words might have produced some support from her hon. Friends. No doubt she has noted the comments of the Child Poverty Action Group which called this a tremendous Budget for the family. I mention this because the Group has so often been quoted by the hon. Lady.
If I said 12½, per cent., it was a slip of the tongue because the figure is 11½ per cent. That is the basis of our asssessment of what will be the November-on-November earnings figures.
The hon. Lady asked about a 53-week pension year and a Christmas bonus. No decision has yet been taken about a Christmas bonus for this year. On the earnings rule, I referred to the increase from £40 to £45, and there will be a further statement on this subject.
The hon. Lady also asked what further action we would take to reduce the number of people dependent on means-tested benefits. The introduction of rent and rate rebates has substantially decreased the number of pensioners who are dependent on supplementary benefits and that is an important step. However, the main contribution in this respect is the new pension scheme, which is designed to ensure that people will retire with pensions that will be well above the level that would make them dependent

on supplementary benefits. That is the great achievement.

Mr. Ioan Evans: Is my right hon. Friend aware that the increase in public expenditure to meet the needs of those whose need is greatest in the community will be generally welcomed? We now have a caring, sharing Government. I welcome the increase for old-age pensioners and the fact that, despite our financial difficulties, they are to get an increase in real terms, but will my right hon. Friend look at the fact that many retirement pensioners are entitled to supplementary benefit but are not claiming it? Will he encourage them to put in claims for the new rates which he has announced?

Mr. Ennals: My right hon. Friend the Chancellor of the Exchequer has helped pensioners not only in terms of the pension uprating but by tax concessions and allowances. It is not only a family Budget but very much a Budget for elderly people, and the response that it has had from most of the organisations representing elderly people shows a different attitude from that adopted in previous years.
We have said many times that we are worried about the number of people who do not claim benefits. We constantly seek the help of hon. Members and the Press to make the benefits known. One of the reasons that they are not taken up is that many people have incomes that are only marginally below supplementary benefit level. There is also the fact that sometimes the action of hon. Members opposite in equating supplementary benefit claimants with scroungers is a disincentive. I hope that they will show a new attitude and that we shall do everything we can to encourage people to claim the benefits to which they are entitled.

Mr. Bowden: Is it not outrageous that the cash allowances for war pensioners' vehicle schemes have not been increased for 12 years? Will the Secretary of State please do something about this?

Mr. Ennals: This matter is under consideration.

Dr. Edmund Marshall: Can my right hon. Friend give us an assurance that the child dependency allowances in relation to retirement, invalidity and widows'


pensions will be increased in November by the same order as the increase in child benefit over the coming year?

Mr. Ennals: If the child dependency allowances are long-term, they will be based on the figure of 11½ per cent. and if they are short-term, they will be based on the 7 per cent. figure.

Mr. Pardoe: Can the right hon. Gentleman say something more about his statutory requirement to meet the rise in earnings? Is he aware that his estimate that earnings from November to November will rise by only 11½ per cent. is astonishing when we bear in mind that the latest Government estimate from August to August is 14 per cent.? The Secretary of State's estimate implies a very tough phase 4 indeed. Will he give us the basis of his calculations?

Mr. Ennals: When I announced a year ago the uprating for last November, my estimates were challenged by hon. Members on both sides of the House, but they turned out to be accurate to the nearest 0·1 per cent. It is my expectation that the forecast this year will be no less accurate. In the current pay round, more than 95 per cent. of employees who have reached settlements have settled within the 10 per cent. guidelines. Although the average increase in earnings for the current round will probably turn out to be somewhat above 10 per cent., I am confident that a pensions increase of 11·4 per cent. will cover the rise in earnings from November 1977 to November 1978.

Miss Joan Lestor: I warmly welcome the assistance to families which has been announced, but can my right hon. Friend say what thought he has given to ensuring that local authorities reflect the obvious need for an increase in boarding-out allowances and other payments made to people who are fostering children in the care of local authorities?

Mr. Ennals: This is a question for local authorities to decide, but I certainly hope that they will note not only the spirit but the fact of the announcement made today and that this will be reflected in whatever allowances they may decide. However, it is a matter to be decided by local authorities.

Mrs. Bain: May I add the congratulations of this Bench on the upratings

announced by the Secretary of State and join his condemnation of those Conservatives who have campaigned so actively against those whom they define as scroungers? May I ask for an assurance that, in terms of discussions on rent and rate rebate schemes, he will include representatives of the Scottish Office in view of the high level of local authority tenancy in Scotland? Has he made any assessment of how much of the £1¾ billion will be clawed back, in view of the importance of this to lone-parent families who have often found that what has been given with one hand has been taken away with the other?

Mr. Ennals: I appreciate the hon. Lady's comments. Obviously all the benefits apply to Scotland as much as to England and Wales and I am sure that they will be noted and appreciated in Scotland. The question of rent and rate rebates is a matter for my right hon. Friend the Secretary of State for the Environment and I know that he will take into consideration Scottish interests and representations, and I have no doubt that the advisory committee will reflect this.

Mr. Ovenden: I congratulate my hon. Friend on his announcement about the doubling of the premium for single-parent families on child benefit, particularly as this is the second doubling of the premium in a relatively short period. Is he aware that all those concerned with the welfare of one-parent families will be grateful for what he has done, but would he accept that one of the problems arising from his statement is that the gap between short-term and long-term supplementary benefit rates will widen? Does he not now accept that there is a strong case for shortening the waiting time for long-term benefit, particularly where families are involved? Will he say whether he has given any consideration to reducing the qualifying hours for FIS for one-parent families?

Mr. Ennals: On the last question, this is a matter which has the interest and concern of my right hon. Friend and myself. We have on a previous occasion said in the House that we hope to have an opportunity of making a move which will be of further assistance to one-parent families. But I am sure that my hon. Friend is right. This second boost to one-parent families will be of great help.


About 240,000 lone parents should benefit from it. It will mean a very substantial cash boost for them.
My hon. Friend is also right that the fact that there is a 4½ per cent. difference between the inflation rate and the earnings rate means that the gap between short-term and long-term benefits is increasing. But I have to say that very many people who are dependent upon short-term benefits also have other means, such as earnings-related supplements, tax refunds, and FIS, which continue to be received by them for up to a year, and many people are covered for occupational sick pay by their employers. Therefore, they are not all totally dependent, as many pensioners are, on what they receive in national insurance benefits.

Mr. Boscawen: I recognise the importance of keeping pensioners well ahead of the rise in the cost of living, as the Secretary of State has been doing. Does the Secretary of State not recognise that the increase in the contribution paid earlier this month was to take up the new second pension scheme's requirements? Will there not be a very substantial increase next April to cover the whole of this latest increase in November?

Mr. Ennals: No, I do not think that that will be so because, as the hon. Gentleman knows, we fixed the new rate that was linked with the new pension scheme. I do not expect that there will be a need for significant changes, but I shall be reviewing the contribution position in the autumn. There will have to be certain changes made then because different rates will then be required for those who are wholly within the earnings-related pension scheme and for those who have contracted out. The hon. Gentleman's fears are not justified in terms of an increase which will be significant or disturbing.

Mr. Faulds: Does my right hon. Friend note and welcome the degree of improvement in generosity of the hon. Member for Wallasey (Mrs. Chalker) compared with the usual mean-mindedness of Thatchery?

Mr. Ennals: Yes, I did note that.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. I propose to call those hon. Members who have been rising to their feet.

Mr. Kenneth Lewis: Is the Minister aware that there are a great many people, including many old people, who, because they have a small amount of capital, cannot receive either supplementary benefit or the various rebates, including heating and electricity rebates? Is not this an undue penalty upon thrift, and will he do something about it?

Mr. Ennals: The assumption that the payment of supplementary benefit requires that someone should have no capital is not correct. However, it is right that, in deciding what assistance is needed by a particular person, one should take into consideration his other resources, otherwise it would cease to be a benefit that could be administered in any practical way.
The fact that pensioners are able to have a degree of capital and to own property without the requirement that they should be denied supplementary benefit shows the extent to which our system is very generous.

Mrs. Wise: Is my right hon. Friend aware that in this matter people are now dealt with far more generously than ever before? Does he recall that when this Government came to office the earnings rule for pensioners stood at £9? Will he dwell a little on the comparison between £9 and the new rate of £45?
Does he also recall that when we came to office there was no premium for one-parent families? There was no special tax allowance. Both of these have been introduced by this Government. Therefore, will my right hon. Friend accept our congratulations especially in relation to child benefit, and accept that we realise that he and his hon. Friend have had a hard job to persuade the Treasury? But it is much better to listen to the voice of the Labour movement than to the voice of the Treasury.

Mr. Ennals: Let me straight away disabuse my hon. Friend of the thought that there ever has been a battle between myself and my right hon. Friends in the Treasury, who are always generosity in the extreme. Certainly they have enabled me to make a very encouraging statement.
I agree with my hon. Friend. I have a great feeling of pride that at this stage we are able to say that, in spite of the


difficulties that our country has passed through, we have ensured not only that the pensioners are protected against inflation but that they have a real increase in their standard of life. I have a great sense of pride that we have been able to introduce, with the support of all parts of the House, a child benefit scheme which is absolutely essential to bring support not only to needy families but to all families and especially to the mother. The fact that we have distinguished especially the special needs of one-parent families shows the extent of our concern.
There has been a degree of uprating of new pensions for disabled people which did not exist at all when this Government came into office. This means that our record of social concern is one in which we on this side of the House are entitled to feel a great deal of pride.

Mr. Ridsdale: Will the Secretary of State look particularly at the position of those over 70 years of age, whose savings have been particularly undermined by the severe inflation of the last four years? In doing this will he bear in mind that the increase in pensions is still 40 per cent. below the increase in the average wage—150 per cent. compared with 190 per cent.?
In order to help the people over 70, years of age, will the Secretary of State try to hurry up the payment of pensions between the date of announcement and November? Is it possible to bring the date forward in some way? In spite of the complacency and the shouts from Labour Members, I can assure the House that there are many pensioners who are still being hard-hit by inflation.

Mr. Ennals: Over the years, when for many working people there has been a reduction in their standard of life—we cannot duck that issue—we have ensured that the improvement in the real benefit for pensioners has moved ahead faster than the real benefit for earners in this country. This is very important. It has increased by 21 per cent. since we came to office. Of course, therefore, we have looked at the needs of the over-seventies and the under-seventies in deciding on the announcement that I have made today. We have made great progress in comparison, on a net basis, with a pension and the net income of earners. A single

person now receives more than one-third of the average earnings of someone at work and a couple receives more than a half of the average earnings of someone at work.

Mr. Peter Bottomley: Can the Secretary of State say whether the level of child benefit is now higher in relative terms compared with average earnings than it has been since the war? May I congratulate him on reflecting the view on all sides of the House that people who are not economically active—pensioners and children below working age—should get a fair deal? I think that he deserves congratulations, and I give them to him unreservedly.
Will he remind the recipients of supplementary benefits that come November they are likely to get a reduction in their supplementary benefit, because the non-means tested benefits have been increased? It is not a party political point, but it is one of grave concern especially to people over retirement age, who get an increase in pension but then see the supplementary benefit decrease when they do not expect it.

Mr. Ennals: On child benefits, the announcement that I have made will mean that the level of family support, the level of child benefit, compared with previous family support—we have also to look at taxes and family allowances as a basis of comparison—is significantly higher than that in the highest year of the previous Government, which was 1971. An accusation has been made, I must say laughingly, by hon. and right hon. Gentleman opposite about the poor becoming poorer. I have announced, on behalf of this Government, the highest level of family support that there has ever been. Child benefit is taken into account in assessing the level of supplementary benefit. Part of the purpose of child benefit is to decrease dependence upon means-tested benefits. It would be an overlapping benefit if one failed to take that into account.

Mr. Sainsbury: I welcome the general increase in pensions, but will the Secretary of State clarify his intentions about the Christmas bonus, which has been very much appreciated by many pensioners? Does the right hon. Gentleman recall that there was general agreement


in all parts of the House in a recent debate that it would be most undesirable for this bonus to become a political football? I hope that the Secretary of State will give positive clarification at an early date.

DETAILS OF NEW RATES OF BENEFIT


The following are the new rates


MAIN INCREASED CONTRIBUTORY AND NON-CONTRIBUTORY BENEFIT RATES













Existing weekly rate
Proposed weekly rate













£
£


Standard rate of invalidity, widow's and Category A retirement* pensions; Category B retirement pension at the higher rate* and widowed mother's allowance
…
…
…
…
…
…
…
…
…
17·50
19·50


Increase of invalidity pension and Category A retirement pension for wife or other adult dependant; Category B retirement pension at the lower rate*
…
…
…
…
…
…
…
…
…
10·50
11·70


Earnings limit for retirement pensioners†
…
…
…
…
…
40·00
45·00


Standard rate of unemployment and sickness benefits; maternity allowance
14·70
15·75


Increase for wife or other adult dependant (applicable to unemployment and sickness benefit only)
…
…
…
…
…
…
9·10
9·75


Widow's allowance (first 26 weeks of widowhood)
…
…
…
…
24·50
27·30


Invalidity allowance payable with invalidity pension, when incapacity began before age:




35
…
…
…
…
…
…
…
…
…
…
3·70
4·15


45
…
…
…
…
…
…
…
…
…
…
2·30
2·60


60 for men or 55 for women
…
…
…
…
…
…
1·15
1·30


Attendance allowance:












Higher rate
…
…
…
…
…
…
…
…
…
14·00
15·60


Lower rate
…
…
…
…
…
…
…
…
…
9·30
10·40


Retirement pension for persons over pensionable age on 5th July 1948 and for persons over 80§:




Higher rate
…
…
…
…
…
…
…
…
…
10·50
11·70


Lower rate
…
…
…
…
…
…
…
…
…
6·30
7·05


Non-contributory invalidity pension, invalid care allowance
…
…
10·50
11·70


Increase of non-contributory invalidity pension and invalid care allowance for a wife or other adult dependant
…
…
…
…
6·30
7·05


Mobility allowance
…
…
…
…
…
…
…
7·00
10·00














(from 5th July 1978)


Guardian's allowance, child's special allowance, increases for children of widows, invalidity, non-contributory invalidity and retirement pensioners, and invalid care allowance beneficiaries
…
…
…
…
…
6·10
6·35‡


Increases for children of all other beneficiaries
…
…
…
…
2·20
1·85‡


* An age addition of 25p is payable to retirement pensioners who are aged 80 or over.


† And wives of retirement and invalidity pensioners.


‡ This takes account of the increase in child benefit from November 1978.


§ Excluding the 25p age addition.

Mr. Ennals: All I can say is that this matter is under consideration and that when a decision is taken an announcement will be made in the House.

Following is the information:

NEW INCREASED SUPPLEMENTARY BENEFIT RATES








Existing ordinary rate
Existing long-term rate*
Proposed ordinary weekly rate
Proposed long-term weekly rate*








£
£
£
£


Ordinary scale:











Husband and wife
…
…
…
…
23·55
28·35
25·25
31·55


Person living alone
…
…
…
…
14·50
17·90
15·55
19·90


Any other person aged:










Not less than 18
…
…
…
…
11·60
14·35
12·45
15·95


Less than 18 but not less than 16
…
…
8·90
—
9·55
—


Less than 16 but not less than 13
…
…
7·40
—
7·95
—


Less than 13 but not less than 11
…
…
6·10
—
6·55
—


Less than 11 but not less than 5
…
…
4·95
—
5·30
—


Less than 5
…
…
…
…
…
4·10
—
4·40
—


Blind scale:











Husband and wife:










If one of them is blind
…
…
…
24·80
29·60
26·50
32·80


If both of them are blind
…
…
25·60
30·40
27·30
33·60


Any other blind person aged:









Not less than 18
…
…
…
…
15·75
19·15
16·80
21·15


Less than 18 but not less than 16
…
…
9·80
—
10·45
—


No specific rates for blind persons less than age 16.

MAIN INCREASED WAR PENSION RATES


All ranks receive the same increases, officers' rates being expressed in pounds per annum.


PART I: DISABLEMENT BENEFITS












Existing weekly rate
Proposed weekly rate












£
£


Disablement pension for private at 100 per cent. rate
…
…
…
28·60
31·90


Unemployability allowances*:












Personal allowance
…
…
…
…
…
…
…
…
18·60
20·75


Increase for wife or other adult dependant
…
…
…
…
10·50
11·70


Comforts allowance:












Higher rate
…
…
…
…
…
…
…
…
…
4·90
5·40


Lower rate
…
…
…
…
…
…
…
…
…
2·45
2·70


Allowance for lower standard of occupation (maximum)
…
…
…
11·44
12·76


Constant attendance allowance:










Special maximum
…
…
…
…
…
…
…
…
22·80
25·40


Special intermediate
…
…
…
…
…
…
…
…
17·10
19·05


Normal maximum
…
…
…
…
…
…
…
…
11·40
12·70


Half and quarter day
…
…
…
…
…
…
…
…
5·70
6·35


Age allowance with assessments of:










40 and 50 per cent.
…
…
…
…
…
…
…
…
2·00
2·20


Over 50 and not exceeding 70 per cent.
…
…
…
…
…
3·10
3·40


Over 70 and not exceeding 90 per cent.
…
…
…
…
…
4·40
4·80


Over 90 per cent.
…
…
…
…
…
…
…
…
6·20
6·80


Exceptionally severe disablement allowance
…
…
…
…
…
11·40
12·70


Severe disablement occupational allowance
…
…
…
…
…
5·70
6·35

LOCAL GOVERNMENT ACT 1974 (AMENDMENT) (No. 2)

4.1 p.m.

Mr. Fred Silvester (): I beg to move,
That leave be given to bring in a Bill to require in certain circumstances the enforcement of compensation recommended by the Commission for Local Administration.
There is before the House a Bill introduced by the hon. Member for Luton, East (Mr. Clemitson) which seeks to remove one of the impediments which prevent local authorities from meeting a suggestion

for compensation made by the local government Ombudsman. I support that Bill, but it unfortunately does not meet the case where the local council refuses to remedy an injustice. Such cases are few, but not quite as rare as the statistics would have us believe. I can perhaps illustrate this by relating what happened in a specific case.
I refer to a Mr. Harris who lives in Manchester. He applied for an improvement grant to convert an old house into two flats. He is not a wealthy developer. He was simply doing this as a one-off exercise out of his own savings. Manchester City Council gave Mr. Harris his


first permission in May 1972, but the case went on for such a long time that by March 1974 Mr. Harris was required by his bankers to sell the property because they would wait no longer.
The effect of the council's behaviour was expressed very clearly by the Ombudsman who referred to the way in which the council kept changing its mind. Mr. Harris, he said,
had started with provision for a chute and was asked to provide a stairway. He made provision for a stairway and was then advised to provide Council"—
This went on for two years. When the local government Ombudsman was eventually approached, he had some difficulty because this was at the beginning of his operations. The important thing is that when he concluded his report he found a case of injustice proved and he went on to say:
Had it been open to me to have regard for what happened in the days of the former Council"—
that is before 1974—
I believe that some strong criticism could have been justified.
In the event the city council wrote back to say that it had improved its procedures but that it would offer Mr. Harris nothing, even though he had suffered loss of capital, of interest on the capital and of professional costs. The Ombudsman wrote back and pressed for at least some contribution to the professional costs. He said,
In my opinion some action is necessary to dissolve the individual injustice
The council refused and the Ombudsman decided not to press the matter further.
Mr. Harris cannot afford to take the matter to court. Local publicity, such as it was, was not enough to make the council change its mind. I cannot raise the matter with the Department, as the Minister knows, because he wrote to me and said
the Secretary of State has no powers of intervention or inquiry in matters of this kind.
I cannot raise the matter in the House because I should be out of order. So where do Mr. Harris and those like him go? The solution lies in recourse to the House by some means, and that therefore means to a Minister answerable to the House.
In his report the Commissioner for Local Administration raised this matter, but of course he came up against the opposition of the body which represents the various councils. In response to the suggestion that there should be the power of enforcement it said that the suggestion
canvasses the idea that Local Commissioners should have power to enforce remedies, or that there should be other machinery to enforce remedies. However, all ombudsmen systems in England and Wales keep to the principle that the reports only refer to cases of maladministration. Responsibility should rest with the responsible body charged with the service…. It is regarded as fundamental that the present system should continue whereunder a local Commissioner suggests a course of action to remedy an injustice, leaving the final decision to the individual authority. The effective sanction is public opinion.
A similar view was expressed by one of the commissioners, Mr. Cook, who said:
My reports are made publicly available…. Thus the teeth are the teeth of public opinion.
Unfortunately these teeth do not always bite. There are cases—they are not large in number, but they will grow over the years—where local publicity has not been enough, partly because there is not nearly as much local publicity as accompanies matters dealt with by the parliamentary Ombudsman, and partly because this House is more sensitive to publicity than are many councils.
In his report Mr. Cook, the local government Ombudsman, in spite of his feeling that he should have no powers, was eventually forced to make the following statement. Every year he has one or two of these cases, and this statement was in one of his reports dealing with a case in Beverley, in which the council had taken no action. He said:
The Local Government Act 1974 provides a procedure whereby a citizen can have his or her grievance subjected to impartial investigation and report. There must be ause for concern where the implications of such a report are not fully heeded, thus in effect setting aside an avenue of redress that Parliament has provided".
So the "setting aside" of that "avenue of redress" is what has given rise to this Bill. Its object is to provide that where a council takes no action as a result of a local government Ombudsman's report, the local government Ombudsman or the complainant should have the power to refer it to the Secretary of State.
I quite understand that this will be treading on various toes of local autonomy, and in order to limit that I am suggesting that in the first instance, at least, this power of referral should apply only where cases of maladministration arise from matters which receive specific Government grant. It is surprising how widespread that is, however, and it will cover most of the cases I have in mind.
When we created the Ombudsman the object was to see that the need to remedy a personal injustice was raised above the convenience or embarrassment of the State. That was what it was all about. In spite of that, the claim that local authorities must be autonomous is being erected as a barrier. Once again personal injustice is subjected to bureaucratic theory. It must stop, and my Bill is a step in that direction.

Question put and agreed to.

Bill ordered to be brought in by Mr. Fred Silvester, Mr. Tony Durant, Mr. Tom Arnold and Mr. Ivan Lawrence.

LOCAL GOVERNMENT ACT 1974 (AMENDMENT) (No. 2)

Mr. Fred Silvester accordingly presented a Bill to require in certain circumstances the enforcement of compensation recommended by the Commission for Local Administration: And the same was read the First time; and ordered to be read a Second time upon Friday 28th April and to be printed. [Bill 103.]

Orders of the Day — WAYS AND MEANS

Order read for resuming adjourned debate on Question [11th April].

AMENDMENT OF THE LAW

That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to—

(a) the making of any amendment with respect to value added tax so as to provide—

(i) for zero-rating or exempting any supply;
(ii) for refunding any amount of tax otherwise than by virtue of a provision relating to bad debts;
(iii) for reducing the rate at which tax is for the time being chargeable on any supply or importation otherwise than by reducing that rate in relation to all supplies and importations on which tax is for the time being chargeable at that rate; or
(iv) for any relief other than relief applicable to goods of whatever description or services of whatever description; or

(b) the making of any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge is payable; or
(c) the making, except in relation to farming or market gardening, of any provision for affording relief from tax by the adjustment of fluctuating income.—[Mr. Healey.]

[Relevant European Economic Community Documents; R/1721/77, R/2080/77, R/2473/77, COM (77) 640, the Economic Situation Annual Report, R/654/78 and R/655/78 on the economic situation in the Community and economic policy guidelines.]

Question again proposed.

Orders of the Day — BUDGET RESOLUTIONS AND ECONOMIC SITUATION

4.9 p.m.

Sir Geoffrey Howe (): I begin by following the example of my right hon. Friend the Leader of the Opposition in congratulating the Chancellor on the manner of his presentation. It is the second time I have had to do it on an occasion such as this in his absence but we are glad to welcome him and I am glad to renew the congratulations extended to him on the manner of his presentation.
I am glad also to have an opportunity of proffering to the Chancellor, if he will accept it, a certain amount of sympathy at the difficulty that must have faced him in pursuing so many conflicting objectives as he introduced his thirteenth Budget. He had, on the one hand, to try to atone for the quality of reception of the 12 that had gone before. He had, on the other hand, to try to minimise the chances of his party's defeat at the next General Election, when the Prime Minister sums up courage to go to the country; and also, rather surprisingly for a man with such a reputation for modesty, apparently he had to set about paving the way for his succession to the leadership of his party in due course.
It is difficult enough to reconcile an appeal to the populace with something that commends itself to the taste of the Parliamentary Labour Party. The Chancellor set about it with all the enthusiasm of a man trying to sing the words of "Rule Britannia" to the tune of the "Red Flag". As if that task were not enough to daunt him, the occasion had been well publicised as the first test of whether this would be a truly Lib-Lab Budget, and the run-up to this contest had given us an intriguing insight into the personal relationships that prevailed.
The hon. Member for Cornwall, North (Mr. Pardoe), using language reminiscent of the moderation which we came to know and love during the Liberal leadership campaign, set about paying tribute to the Chancellor with a description of his affection for playing the bully, for talking through people, mistaking sledgehammers for rapiers and taking refuge from errors behind the mask of truculent arrogance—a very apt description. We are told that partners in marriage are said to grow alike as the relationship goes on. This particular marriage started off with them made for each other. The Chief Secretary, poor soul, has had, we are told, the unenviable task of acting as a kind of supernumerary marriage guidance officer.
As though personality was not creating enough difficulties, there has been much confusion on policy also, because, as we understand it, the Liberal Party has been pressing for an increase in employers' national insurance contributions, and yet two years ago it voted against the Chancellor when he introduced that very same

thing. The Chancellor must have felt that taking advice from the Liberal Party was like trying to take counsel with a kaleidoscope and to pursue a courtship with something resembling a circus horse, one half of which looks as though it wants to get to the altar and the other half thinks it safer to stop off at the divorce court on the way. I do not want to be unfair to the hon. Member for Cornwall, North.

Mr. John Pardoe (): It is very good of the right hon. and learned Gentleman.

Sir G. Howe: The hon. Member for Cornwall, North has been quite right in some of his observations widely reported in the Press. Hon. Members may remember that in that distinguished journal the News of the World on Sunday last, the hon. Member said that the
first three years of the Chancellor's performance were the worst since the war
a record of
economic blunders, wrong forecasts, misplaced optimism, poor judgment and sheer wrongheaded dogmatism unmatched in modern times".
So spoke the economic spokesman of the Liberal Party. That tells us a great deal about the self-confidence of the Liberal Party, that its Members would rather keep such a man in office for two more years than risk their seats at a General Election—because the hon. Member for Cornwall, North was quite right. It is an astonishing record over which the Chancellor has to look. The gross domestic product is still below what it was five years ago and the living standards of the average family are still well down, and of those on twice or three times the average very badly down.
The nearest we have come, I suppose, to success in the Chancellor's tenure of the office has been to get inflation back within hailing distance at least of what he said it was at the last General Election; but the pound has been halved in value and unemployment has almost trebled. On that point at least, the hon. Member for Cornwall, North has been quite right.
The Chancellor has succeeded in developing a number of differing alibis for his performance as the years have gone by, and he is moving to a different one currently with his frequent reference to the plight that he and our country share with


the whole industrial world and the whole free world which, he is fond of saying, has been having it just as bad. It is not so, of course. Almost no country like our own has had inflation on anything like the same scale or unemployment worse than our own. It is, I think, a unique achievement still to be presiding over a gross domestic product lower than it was five years ago.
The Chancellor may have become so accustomed to our dismal place in the world economic league that it may explain a very odd and unimpressive feature of what he had to say yesterday: that he came to this House of Commons believing it necessary proudly to announce that the new bond that he was arranging to issue on the New York Stock Exchange would be given by the authorities of that city an AAA rating. Has this United Kingdom been reduced to the status of a banana republic? Only the present Chancellor of the Exchequer, after his four years in office, would have dreamed of thinking it necessary to draw attention to, and take credit for, the fact that this country commands an AAA rating.
The phrase "the whole free world" demands a little more examination. It is a very convenient facing-both-ways phrase to use from the Front Bench of the Labour Party, because to those in the Manifesto group it conveys a comfortable impression that their party is still part of the free world. It gives to those in the Tribune group licence and freedom to take an opposite view and to say that everything that has happened is a crisis of capitalism. It is a convenient two-way bet for the Chancellor. I notice that some of those who take that view come up with some fairly strange ideas for a solution of our economic problems. The other day, in a part of London where I live, I saw a poster in an Underground station about a meeting organised, so far as I know, by some member of the Tribune group which bore the intriguing title "Why is there no inflation in Socialist Albania?" I understand the solution is to conclude that since inflation is caused by too much money chasing too few goods, the Albanian solution is to abolish both of them. On that point I come to the central strategy of the Budget, with special reference to what

the Chancellor has said and done about inflation.
The House will have noticed the frequency with which the Chancellor, in his statement yesterday, used words about whether he was going to be right to give a stimulus or boost on this scale or that scale to the economy. But he was certainly right to say that it is not easy to judge the point at which a demand stimulus may prove self-defeating in terms of both jobs and prices, because the reality is that if we are to get the economy right it is not so much the economy that needs stimulation as the people who make it up and make it work.
There is a grave risk that if the Chancellor reverts to the discredited nostrum which he discarded—that deficit financing creates jobs—he will end by creating not jobs but a recurrence of inflation. The pound, which the Red Book says rose in value on average last year by 7 per cent., has fallen by about as much in this calendar year. This year's money supply, as the Chancellor admitted, is turning out certainly ahead of the top limit of his monetary target. Those are both dangerous signs.
We take no comfort from the Chancellor's announcement yesterday that next year's target rate is only one point down on that for this year, because it does not look as if he is taking that objective very seriously. We are even more dismayed by the fact that next year's planned public spending is now to increase, according to the Red Book, by some 6 per cent., by more than £3½ billion, by the fact that the contingency reserve, with the year only one week old, has almost all gone and by the fact that the public sector borrowing requirement, which the Chancellor has certainly been bringing down as a percentage of the gross domestic product, last year to 4 per cent., is actually planned this year to rise to 5½ per cent. of GDP. We find that a disturbing course of events.
It is almost as though the words uttered by the Prime Minister at the Labour Party conference of blessed memory of September 1976—
We used to think that you could just spend your way out of a recession and increase employment by cutting taxes and boosting Government spending. I tell you in all candour that that option no longer exists"—


are becoming in grave danger of being overlooked following the departure of the Prime Minister's son-in-law for a different post in Washington.
Perhaps the best verdict on the Chancellor's determination of his Budget judgment was provided by the fact that, in the very same speech, on the same day, he felt it necessary to announce an increase in minimum lending rate of 1 per cent. It is about as reassuring as a shopkeeper spreading his wares in the window of his shop and deliberately setting off the burglar alarm at the same time.
I turn to the rest of the Chancellor's proposals against a sombre setting. It is not necessary to subscribe to the whole of the analysis and prescription of the Cambridge economic policy group. Indeed, I should be reluctant to tread down that path. But it is possible to share its fears about the future of unemployment and other prospects in this country. It talks of the prospect and possibility of 5 million out of work within a decade. I do not go all the way with that.
If we look, as Labour Members must, at the picture of closure after closure, redundancy after redundancy, in industries of all kinds, at the world of little growth in which we live and at the competition that we face either from capital-intensive high-technology industries in Japan or the United States or from low-cost industries in countries such as Korea or Brazil, it is difficult to be confident about the future on the course charted by the Chancellor.
Many hon. Members surely agree that the time has come to recognise the need for an entirely fresh approach to these problems. The Liberal Party, on the one hand, and the Tribune group, on the other hand, ask for that. Whatever else one may say about the Budget, it is exactly what we have not got.
The Budget, in its total judgment—to borrow words from the Cambridge economic policy group—is nothing more than a short-term response to the pressure of short-term influences. It is most unlikely to make any significant change in the course that our economy is following.
Labour Members below the Gangway propose a distinctive and different approach: an enlarged role for State enterprise for planning, more jobs and

more activities for the National Enterprise Board. I do not take the view that that is likely to be the right course.
The history of the steel industry, for example, shows that in the end, subsidise as we may, defer closures as we may, the jobs still go, but the money that could have gone to modernisation to strengthen the industry for the future has gone to postpone the inevitable rather than to achieve anything else. Subsidies and protection of the right kind in the right circumstances are legitimate to ease the process of change, to defer, to soften hardship, but they represent no solution, and that is not the way that appeals to us.
The answer that the Chancellor gave in his speech was that the main responsibility for restoring the health of our economy must fall on management and the work forces in individual firms and plants. I entirely agree. The right hon. Gentleman went on to say that the Government have the responsibility for providing an environment which encourages them in their work. Again, I agree. But, by "encouragement", one looks for real encouragement on a scale of the kind that we have not seen for a long time. It is exactly that that the Chancellor has failed to offer.
There are two halves to the encouragement which has to be undertaken. On the one hand, we have to seek for the regulations and controls which check and which inhibit enterprise and make it more difficult to succeed. In exchange control, for example, capital is locked up idle in this country so that even the National Enterprise Board does not know what to do with it. We should be thinking of opening the barriers of exchange control to open up opportunities abroad for that money and to create bridgeheads for British exports of services, goods and jobs. We also need to change planning and building regulations which make it much harder than it should be to build and to embark on new enterprises.
Above all, in the context of this debate, we need to change the tax environment. This Budget gives the proof—if proof were needed—that there is no hope of a change of the right kind on the right scale unless the House and the country are prepared to face two things. The first is that there is no room for


any increase in public spending if we are to have room to manoeuvre in getting the tax burden changed. The spokesman for the Liberal Party, in his statement last week, said that we could spend not a penny more on public spending. It is a pity that he and his party nevertheless voted, when we debated the public expenditure White Paper, for expenditure increases of about £3 billion this year, thereby casting away money which would have given room to carry through the Liberal budget, about which we have heard so much.
The second thing that we have to be prepared to do—the Chancellor expressed some sympathy with this, and I know that he understands the argument—is to switch the shape and burden of our tax system from taxes on income to taxes on spending. It is a change in the pattern of the tax system—remembering that in respect of such a change those on benefits are protected. The pension increase, about which we have already spoken this afternoon, is welcome. The increase in child benefits is also designed to facilitate a switch of that kind.
We must also recognise that those at work, when faced with higher direct or indirect taxes, now see income tax as much a part of their cost of living as anything else. That was the point made by the Prime Minister only a fortnight ago.
Rates are part of the retail price index, yet income tax is not. But, from the point of view of the worker who sees a huge bite going out of his pay packet before he receives it, intolerably high income tax is as much something which forms part of his cost of living as any other part of prices. Those are the changes which are necessary and which we shall have to carry through if we are to make the major reforms in our tax system that we need. The reforms are agreed by Opposition Members and, I suspect, by many Labour Members.
We certainly need a substantial reduction in the basic rate of tax—at least back to where the outgoing Conservative Government left it, and beyond. That could have been achieved in this Budget had it been properly designed.
We certainly need to continue raising tax thresholds well beyond the level of

supplementary benefit, and we need to get the top rate of tax down at least to 60 per cent. A much better way of discouraging tax avoidance is to lower the rates which encourage it than to embark upon the constitutional monstrosity of retrospective legislation which the Government have made. We also need to restore the real value of higher rate bands.
All those things could have been achieved within this Budget if public spending were not exploding on the scale that the Government have authorised.

Mr. J. W. Rooker (): May I take the right hon. and learned Gentleman back to what he said about the retail price index? I accept that income tax is part of the cost of living. Is he saving that Tory policy would be to put income tax into the RPI and to take out goods which are already there so that, when indirect taxes go on those goods, the public are cheated, because the RRI will have been fiddled?

Sir G. Howe: I am saying no such thing. The RPI has stood as it has for many years, and it remains as a given factor in our economic life. I am saying what many workers say to me and must say to the hon. Gentleman, if he listens to them. They regard the burden and bite of direct taxation from their pay packets as representing just as important an impact on their cost of living as the prices that they pay in the shops and in indirect taxes. That is the reality and the argument that the Chancellor has recognised, but unfortunately has not moved to do anything about.
Instead of that kind of change, what have we got? We have some changes of the system in favour of small businesses. They are certainly welcome. We have been arguing and championing the cause of small businesses over many years, because they are, as the Chancellor said, vital to the creation of new jobs in the economy.
But the total value of what the Chancellor is proposing for small businesses does not exceed £100 million in loss of revenue in the entire year. It does not begin to undo the damage done to small businesses by this Government. Indeed, it is less than half the amount being taken back from small businesses as a result of last week's increases in employers' national insurance contributions and,


incidentally, a fifth of what would have been taken from small businesses if the Chancellor had accepted the Liberal Party's advice to double that impost.
Sadly, the Chancellor of the Duchy of Lancaster is not here today. He has been conducting a broad-ranging mission among small businesses to see what is necessary to bring them sustenance and succour. The diet which he has produced is about as useful as giving a starving man a diet of bread and water.
Profit-sharing is a matter about which we have heard something from the Chancellor. It is fine that this Government have begun to introduce some kind or scheme for profit-sharing. It is a watered down version of the scheme produced by a study group presided over by my hon. Friend the Member for Guildford (Mr. Howell) over a year ago. It does not give the employee the right to own his share from the start. It does not give him the right to tax relief on sale at the end of five years. It is only a very modest step in the right direction of spreading ownership widely throughout industry.
Only the Parliamentary Liberal Party could believe that this Government's introduction of this profit-sharing scheme represents a lasting conversion on the part of the Labour Party to the cause of profitable private enterprise.

Mr. Pardoe: It is more than we ever got from the Conservatives.

Sir G. Howe: The investment income surcharge changes have been useful, but still do not begin to restore the levels under the last Conservative Government.
The major change that the Chancellor has chosen to adopt is the introduction of the reduced rate band. It is true that this does something for the poverty trap, but I believe that it does nothing like as much as would have been done by raising the thresholds across the board. For the same sum as the right hon. Gentleman has spent on the reduced rate band, the thresholds could have been raised by four times as much as the Chancellor raised them yesterday. That would have had the effect of taking many more people out of the tax system altogether and taking the thresholds well clear of short-term benefit rates.
As it stands, as I understand it, the reduced rate band runs out at £35 a week for single people and £45 a week for married people. The benefit goes overwhelmingly to juveniles and very largely to part-time workers, many of them pensioners and married women.

Mr. Rooker: That is 4 million people.

Sir G. Howe: Four million people, but a very large proportion of them are in the categories that I have described. For the rest, for the other 20 million taxpayers, the changes that have been made make the differential trap a good deal worse, because the reduced rate band confers a single flat-rate benefit on all those on any other income level beyond the limit of £45 a week. When one looks at what has actually been done for them, one finds that the total effect of the tax changes for those earnings more than £45 a week is that almost all the tax reductions are almost entirely swallowed up by increases in national insurance contributions. For a man on the average wage, the net addition to take-home pay as a result of this Budget amounts to £14 a week.

Mr. Rooker: That is not bad.

Sir G. Howe: I am sorry. I meant 14p a week. It is a very modest change, but that is the reality. Those earning more than the average wage, people on £120 a week, for example, will be quite a considerable amount worse off as a result of the combined effect of the tax changes and the national insurance increases.
What else does the Chancellor offer by way of an environment that will encourage those who work in British industry? When we heard that passage in his speech we were quite enthusiastic and exhilarated, thinking that at last he was recognising what needed to be done, but, as we followed him through, what he came to thereafter was the prospect of the industrial strategy, as he put it, reaching down to the factory floor.
The industrial strategy is not something that I find discussed with much excitement by working people up and down the country. Where there are people who have heard of the industrial strategy, it is regarded as an activity in which some representatives of industry have to engage in order to teach Labour Ministers at least a little about the facts of industrial life and to stop them getting


up to worse mischief. There is no real encouragement in that.
What most people want, and what they were expecting from the Chancellor, was a real reduction in the amount of tax they have to pay on average and above-average wages, but many people are getting less in their pocket. For those earning between £45 and £145 a week, every extra pound they earn will be carrying more tax and national insurance deductions.
This is the most remarkable thing—that this Budget, which is meant to encourage and remotivate British industry, leaves the great majority of taxpayers paying less out of each extra pound they earn in their pay packet over the last part of the income scale. Indeed, one touchstone by which to judge this Budget is the rather curious Budget Resolution No. 13:
13. Divers and diving supervisors (income tax)
That provision may be made for applying Schedule D instead of Schedule E to certain divers and diving supervisors.
For the benefit of those who may not have followed these matters very closely I shall explain that that means that the Government are being driven and obliged to make special provision to relieve divers, in effect, from the general burden of the British tax system. That is a change that the Government are not making for other people. They are doing it for divers because the North Sea is the only place where men engaged on vital work can make a real comparison between their tax burden and the tax burden on those from other countries. It is a measure of just how far the Chancellor has failed to put the matter right elsewhere that he finds it necessary to make that special provision in that Budget Resolution.
We must express disappointment over the shape and scale of this Budget. It is said by some to be a Liberal Budget. If it is a Liberal Budget, and this is all that a Liberal Budget is mean to be able to achieve, heaven save us from any more Budgets like this. The Parliamentary Liberal Party, for reasons we can well understand, is much more easily satisfied than those who voted for its Members.
If this is any kind of a Budget, it is closer to being a Tribune group-TUC Budget than a Budget that should commend

itself to the Liberal Party, because it consists of two parts—massive increases in public spending and substantial tax cuts, administered in the wrong way and for the wrong reasons, ill-designed to restore encouragement to British trade and industry.
For this Chancellor, it is admittedly an uncharacteristic Budget. Having plundered the pockets of the British people for four years, he now presents himself as committing an act of charity when he comes to the fact that he is giving some back.
The House would do well to remember what was said, I think, of the Dissenters' treatment by James II: "You are therefore to be hugged now only that you may be the better squeezed another time."
This is a Budget that is hostile to enterprise, hostile to skill, hostile to jobs, hostile to job creators, hostile to wealth creators and hostile to prosperity. That is why the country truly needs a fresh start.

4.37 p.m.

The Chief Secretary to the Treasury (Mr. Joel Barnett): I suppose that I should congratulate the Shadow Chancellor on the humorous parts of his speech. The more serious parts lacked a little credibility.
As was clear from the right hon. and learned Gentleman's speech and that of the Leader of the Opposition, the right hon. and learned Gentleman was faced with a classic schizophrenic problem of his own making. On the one hand, he wanted to see much larger income tax cuts. On the other hand, he and his right hon. Friend attacked my right hon. Friend the Chancellor of the Exchequer because the borrowing requirement was too high and because this was a give-away electioneering Budget. Which is it? The right hon. and learned Gentleman cannot have both.
In practice, not surprisingly—to mix metaphors a little—the right hon. and learned Gentleman became impaled on the horns of his own schizophrenia. His dilemma was made all the worse because he knows that this will prove to be both a popular and a responsible Budget and will be seen as such in the country.

Mr. Terence Higgins (): Mr. Terence Higgins (Worthing) rose—

Mr. Barnett: I shall not give way at this stage. I appreciate that the hon. Gentleman is in some difficulties with his own Front Bench and wants to try to make up for all the criticism he has made. I shall give way to him later. I am sorry. I should not even say that.

Mr. Higgins: Mr. Higgins rose—

Mr. Barnett: I shall give way to the hon. Gentleman later.

Mr. Higgins: Mr. Higgins rose—

Mr. Barnett: This is ridiculous. I have hardly started my speech. The Shadow Chancellor spent much of his speech making jokes at the expense of my right hon. Friend the Chancellor of the Exchequer. As soon as I have one little joke, Conservative Members want to intervene. I am surprised. I shall return to the hon. Member for Worthing, but first I shall deal with his right hon. and learned Friend.
First, he told us that he would have a fresh approach. He says that we need a fresh approach. What did we have from him? I do not know about Conservative Members, but I did not detect one constructive comment throughout his speech.
Both Mrs. Thatcher and her Shadow Chancellor have constantly promised 'massive cuts' in taxation if and when they get to power. They have not, however, told us in convincing detail how they would go about it.
Those are not my words but those written today by Mr. William Davis in that well-known paper the Daily Express. The article continues:
Making any real impact on the system involves huge sums and some painful—and unpopular—decisions. The Liberals have calculated that it would require a minimum of £6 billion, a figure that frightened even them.
Mr. Davis cannot have been talking to the hon. Member for Cornwall, North (Mr. Pardoe) as I have. The hon. Gentleman does not frighten so easily. Mr. Davis adds:
Now we have heard from Mr. Healey, Mrs. Thatcher should spell out in unequivocal terms what kind of Budget we could have expected from her. Nothing less will do.
Conservative hon. Members will have to answer that sort of question when, for example, we come to a General Election. However, they will have had nothing from the right hon. and learned Gentleman today to enable them to offer any answers.

Not one word of that sort did we have from the right hon. and learned Gentleman. The answer that Conservative Members will be compelled to give is that a Conservative Government would increase the rate of inflation by increasing indirect taxes.
We do not know what level of borrowing requirement they want. The right hon. Lady the Leader of the Opposition and the right hon. and learned Gentleman have said, or implied, that the borrowing requirement should be lower. What exactly do they want it to be? We were not told anything about that in the right hon. and learned Gentleman's speech. He uttered not one word about it. What sort of responsibility is that from someone who purports that he will have the job of being the real Chancellor? We did not hear anything responsible from him today. Indeed, the consequences of everything that he suggested would be disastrous for the economy.
I take one simple example. The right hon. and learned Gentleman said that he would want to see the top rate of income tax reduced to 60 per cent. That is also what the Liberals want. Both the right hon. and learned Gentleman and the Liberals are wrong, but that is not surprising. For a married man on £25,000 a year the right hon. and learned Gentleman would be increasing his net take-home pay by £1,250. For the man on £50,000 a year the increase would be £7,032. A Conservative Government would be doing that, but at one and the same time the average-paid and lower-paid workers would, because of the huge costs, get nothing but massive increases in their living costs. That would be the consequence of what the right hon. and learned Gentleman would be doing on the other hand.

Mr. Malcolm Rifkind (): Mr. Malcolm Rifkind (Edinburgh, Pentlands) rose—

Mr. Barnett: No, I am not giving way. The right hon. and learned Gentleman can answer if he wishes. He is perfectly capable of doing so. Whatever the right hon. Member for Lowestoft (Mr. Prior), the moderate, if I dare say so and upset him again, Shadow Secretary of State for Employment, wants to do about pay policy, the policies of his right hon. and learned Friend the Shadow Chancellor and his right hon. Friend the Leader of


the Opposition would destroy any chance of getting any moderation in pay policy.
What would we get? We would be back to the wildest pay and price inflation. That is what we would get from their policies.

Sir G. Howe: Does not the Chief Secretary yet realise, even after his teach-ins with the hon. Member for Cornwall, North (Mr. Pardoe), that one of the primary difficulties in getting top management to return to Britain to run companies such as British Leyland—I refer to those who have gone overseas—is the crushingly high level of direct tax rates that the Government persist in imposing on them? That is the reason for making the change.

Mr. Barnett: I can assure the right hon. Gentleman that the teach-ins between myself and the hon. Member for Cornwall, North are a two-way game. We are teaching one another. I hope that the hon. Gentleman has learnt a lot in recent weeks. We want to see reductions in the rates of taxation. However, if the right hon. and learned Gentleman is saying that £2½ billion net is too much, although he did not tell us exactly that, or even if he is saying that it is about right, anything more that he gave to those on the top rates would give either an increasing cost of living for others, as he has told us, or would have to come from tax reliefs for the lower paid. Where is it to come from?

Mr. Rifkind: Mr. Rifkind rose—

Mr. Barnett: No, I shall not give way. Even if the right hon. and learned Gentleman's fresh approach, as he calls it so pleasantly, is such that he is 100 per cent. right on the consequence and effect of further tax cuts and we have a huge improvement in industrial performance, he did not produce, and never has produced, one piece of hard evidence to support his policy. Any improvement would be massively upset by the huge increase in industrial costs and by the pay and price explosion that he would have provoked.
That is the background to the employment situation that we would face. When the right hon. and learned Gentleman and his right hon. and hon. Friends express concern about the level of unemployment,

we are bound to say that in those circumstances they are being just a little hypocritical. I put it no more delicately than that.
Not everyone believes that everything can be done by the money supply.
Without restraint in pay bargaining the inescapable alternative will be unemployment."—[Official Report, 30th March 1977; Vol. 429, c. 437.]
That is what the right hon. and learned Gentleman was suggesting last year. However, does he believe that his so-called fresh approach would produce the moderation in pay settlements that is needed? If he does—I note that he is nodding—he must be on his own. I did not see anyone else on the Opposition Front Bench nodding. I find it incredible that anybody could imagine that that could be the case.
The right hon. and learned Gentleman had the right analysis. The Government must play their part in creating the environment, as he rightly says. However, if we were to pursue his policies with rigid money supply on top, we should have either large-scale unemployment or confrontation, or more likely both.
The central problem is unemployment, but even worse than the misery and waste of the present high levels of unemployment is to pretend to the unemployed that this or that single, simple solution will solve the problem. It will not. The plain fact is that there is no single simple panacea for the desperate problem of unemployment that we face. The right hon. and learned Gentleman underrates the intelligence of the people if he believes that cutting taxation will solve all our problems.

Mr. Prior: When the right hon. Gentleman says that there is no simple solution to the problem of unemployment, is he not rebuking his right hon. Friend the Chancellor of the Exchequer, who produced a figure of 1 million fewer unemployed only a few months ago?

Mr. Barnett: I am not unaccustomed to rebuke my right hon. Friend from time to time. However, on this matter I would not wish to rebuke him. What he said on the subject was absolutely right.

Mr. Dennis Skinner (): My right hon. Friend is commonly known as "Top Cat" in some circles, but he is


doing a pretty good job. In dealing with unemployment he has every right to challenge the Tories as he is doing. However, he must answer the question that I am about to put. He has said that there is no simple panacea. However, when cuts in public expenditure were announced throughout the whole of 1976 we were told by my right hon. Friend and his colleagues on the Treasury Bench that the cuts would produce additional unemployment. The answer is not all that simple but it is fairly easy. If we increase public expenditure by an amount equivalent to that which has been cut, some of the unemployment would be eliminated.

Mr. Barnett: As I knew that my hon. Friend would be raising that point I can tell him that I shall be turning to it. However, I am bound to tell him, as I think he knows, that I do not altogether agree with him. I shall come to the point that he raises at a later stage.
The right hon. and learned Gentleman's solution appears to be, as always but without specifying it, to cut public expenditure and increase tax reductions. We have it on the evidence of the Leader of the Opposition that she prefers the Good Samaritan to the State. The right hon. Lady was not, of course, referring to the organisation of that name, which does a first-class job. However, in her speech on that occasion, she said:
So do not be tempted to identify virtues with collectivism. I wonder whether the State services would have done as much for the man who fell among thieves as the Good Samaritan did for him.
I am not sure where she put the right hon. and learned Gentleman in that, but she certainly could not have been referring to him as a Good Samaritan because his idea of a Good Samaritan is to add large sums of money to the costs of lower-paid people and then wait for the millionaires, who are given massive tax reliefs, too, to play the Good Samaritan. That is his policy.
It is as foolish to imagine that the Good Samaritan could answer the terrifying social and financial problems of a modern State as to argue that income tax cuts are the simple answer to our poor industrial performance. To accept that kind of argument—and it is the only argument that has ever been pursued from the Opposition Front Bench; I have never heard another argument from them—[An

HON. MEMBER: "Rubbish."] That is absolutely right. It is rubbish, because it ignores the facts completely.
In the 1950s, prosperity in Britain was certainly growing, but the growth was near the bottom of the international league and was the lowest in Western Europe. Between 1950 and 1962, our national wealth grew about 2·3 per cent. a year. In the United States, the growth was 3·3 per cent., and in Western Germany it was over 7 per cent. [An HON. MEMBER: "What is it now?"] Of course, it is very much lower in Western Germany, in the United States and in the whole of the OECD. What is more, they did not start from the kind of situation from which the present Government started in February 1974. [Interruption.] It is very difficult to have a serious discussion about how one can improve industrial performance with the kind of comments that we get from the Opposition.
The fact is that if one looks back over 100 years, one sees most other major economies out-performing us. That is over 100 years—even when there were no Labour Governments, sadly. Our average growth for each decade for the century from 1860 was about 21 per cent., exceeding only that of France in Western Europe, and strikingly below that of Germany, about 31 per cent., and those of the United States and Japan, both over 40 per cent.

Mr. Rifkind: Will the Chief Secretary give way?

Mr. Barnett: No, I do not think so. [HON. MEMBERS: "Give way."] I shall finish this point and then give way. [Interruption] That remark is quite typical. I am trying to make a serious point, which I hope that we shall all note, that this country has performed badly for some 100 years. That is not something to jeer at. It is something to be very sad about.
The fact is that this point deserves to be noted if only because we shall never begin to get the problem right if we believe that the sole solution is to cut income tax and sit back and pray for it all to come right, as the right hon. and learned Gentleman seems to suggest that we should do.

Mr. Rifkind: When the Chief Secretary is basing his case on international


comparisons of past performance, will he mention one other of our major competitors which are actually producing less now than it was four years ago?

Mr. Barnett: Actually we are not producing less than we were four years ago, as the hon. Gentleman will see if he cares to look at the figures. If he cares to look at the growth of output over the last four years, he will see that most other countries have done very badly as well. [HON. MEMBERS: "Answer the question."] The hon. Gentleman is wrong, anyway. But I ask hon. Members to take seriously the problem of Britain's poor industrial performance, not for four years but for 100 years, relatively speaking. It is a nonsense to suggest that the whole answer is to cut taxes.

Mr. Peter Tapsell (): Before the Chief Secretary leaves that interesting and important argument, will he also add the corollary that for a very large part of the historic period that he has mentioned this country was building up enormous overseas assets, which in fact helped us to pay to win two world wars?

Mr. Barnett: With the greatest respect to the hon. Gentleman, any decent analysis of that period will show that one of our problems was that we were living off the Empire for far too long and were not ready for the time when it turned into a Commonwealth. That is one of our major problems. Indeed, it is that kind of shallow analysis that is the cause of so much of our troubles.
But even if we improve our industrial performance, an objective on which I hope that at least we can all agree, we face many immense problems which no Budget can solve. I refer to the world-wide problems facing every country in the developed world of surplus capacity in so many major industries—steel, shipbuilding, textiles, petrochemicals—all made worse by growing competition as poorer countries rightly expand their own industries. The solution here can never rest with just one country; it rests with much greater co-operation both within the developed countries and between the developed and the developing countries, to bring about an expansion of world trade.
I mention this to show that it will not be enough simply to increase our output. We also have to be able to sell the

increased output. Also, of course, whilst improved industrial performance is essential and will help us to sell it, and at the same time create more jobs, or at least prevent the loss of existing jobs, there are very severe limits to what can be achieved against a background of slow growth in world trade.
However, as the Chancellor said yesterday, the Budget measures make our contribution to world expansion. I am certainly hopeful that the further summit meeting in July will make it possible to do more, but for now—[HON. MEMBERS: "Oh."] Are Opposition Members getting worried about what we might yet do in July?
The fact is that the criticism of this Budget has been that perhaps we have done too little, or perhaps we have done too much, getting the balance wrong, both within what we felt able to do on taxation and between taxation and public expenditure. I want to deal with this criticism, but, before I do, it will not surprise the House if I start with a conclusion—namely, that with the criticism so diverse and wide-ranging, most reasonable observers will conclude that the Chancellor has got it about right. [HON. MEMBERS: "Oh."] I said "most reasonable observers." I do not expect to find many on the Opposition Benches. Most reasonable observers will think that.
But no economist or politician can forecast with absolute certainty the actual size of the Budget stimulus to within £1 billion or £2 billion either way. I notice that the right hon. and learned Gentleman the Shadow Chancellor did not attempt to do so. Although most people will not be able to forecast with absolute certainty, I am sure that it will not prevent them from forecasting with absolute certainty from time to time, if not constantly. But the right hon. and learned Gentleman, as ever, took the coward's way out and did not make any judgment at all as to what the size of the net Budget stimulus should be. I am not surprised. I am asking the Shadow Chancellor why he did not tell us what we should have done.
Perhaps it is because on the odd occasion when the right hon. and learned Gentleman has made a forecast, he has been as wrong as anyone else. I do not necessarily blame him for that, because it is not easy to get these forecasts right.


I understand that he can be as wrong as anyone. Indeed, two years ago he said:
It will…prove impossible to finance recovery of the economy alongside the likely scale of public spending without an explosion of the money supply.
He got that wrong, because there was no explosion of the money supply.
The right hon. and learned Gentleman went on to say:
This will mean an acceleration of inflation in 1978.
But of course, he was completely wrong about that, as he knows very well.
The fact is that the best comments on forecasts that I have seen of late came in The Guardian of last Friday, by Hamish McRae. Referring to a Mr. Brian Reading, who will be known to Opposition Members, according to Hamish McRae, Brian Reading had something to say about forecasts, and he was writing perfectly fairly about the Treasury model, although I am sure that he would be the first to agree that it would apply almost equally well to any model that one cares to take. It is very interesting, because he said:
Over half the forecast rise in imports of manufactured goods is accounted for by the time trends in the Treasury model. A time trend is basically an econometrician's way of saying that because something has happened in the past, though for no obvious reason, it will probably continue to happen in the future. It is obviously a very unsatisfactory basis on which to predict catastrophe.
Then:
Mr. Reading's parting shot is this: 'The dependence of the balance of payments forecast on this one shaky area of the model—where the results depend upon the extrapolation of exponential time trends and the manipulation of sizeable residuals—means that little confidence can be attached to the forecasts.' Or as Hilaire Belloc put it:
'Oh let us never, never doubt
What nobody is sure about'".

Mr. Peter Hordern (): Will the Chief Secretary give way?

Mr. Barnett: I should like to finish this point.
Taking what no one is sure about—namely, the best forecasts—with all their limitations and a large pinch of salt, as well as looking at the prospects for world trade as we now see them, all that we can do is measure whatever stimulus the Budget

can provide on the best judgment which will allow a sustainable increase in output—and the emphasis should be on the word "sustainable".

Mr. Hordern: The right hon. Gentleman is talking about getting things wrong. Would he read the Financial Statement produced by his right hon. Friend? He said before that the growth of GDP in this country had been rather better than that of some other countries. I refer him to paragraph 3 of the Financial Statement:
For 1977, according to provisional data, the growth rate for the United States and Japan will be around 5 per cent., but that of Germany no higher than 2½ per cent.
In paragraph 40, the statement says that, for the United Kingdom,
GDP (average estimate) for the year as a whole rose by ¾ per cent. between 1976 and 1977, but there was no growth at all during the course of 1977.

Mr. Barnett: Unusually for him, the hon. Gentleman could not have been listening. I did not say that our performance for the last four years in terms of industrial output was better than that of other countries. For myself, I respect the views of those who, taking different assumptions on the forecasts which should be made, come to different conclusions. Indeed, I recognise that some of my hon. Friends in particular would have wanted us to do rather more than we were able to do.

Mr. Ron Thomas (): Mr. Ron Thomas (Bristol, North-West) rose—

Mr. Barnett: Before I give way, may I tell my hon. Friend what I wanted to say about what I know he would have said?
I understand and sympathise with the reasons which led many of my hon. Friends to ask for a larger stimulus. They stem almost entirely from a deep desire to reduce the level of unemployment, which I very much share. But it is impossible to be precise about the stimulus to the nearest £1 billion or £2 billion. A larger stimulus would in my view carry a degree of risk which is unacceptable if we are to achieve a steady—I emphasise the word "steady"—and sustainable growth of output and a permanent and lasting reduction in unemployment.
I should like to explain why I come to that conclusion. First, one must accept


—and I do—that a larger stimulus would raise domestic demand. In all but the very short term, domestic output is more likely to suffer rather than to gain. Higher imports would lead to a balance of payments deficit, despite North Sea oil. Of course, that is a consequence we might be able to live with, given our financial strength, but the other effects would be much less easy to live with—for example, a sharply increased borrowing requirement, with pressure on the exchange rate and interest rates, all of which would feed on themselves, causing the rate of inflation to accelerate.
Faced with this, and the general shock to both consumer and industrial confidence, investment plans would inevitably be in jeopardy, and jobs with them. All in all, it is a gamble in going for a larger stimulus which I, for that reason, do not feel we should have taken.

Mr. Ron Thomas: Would my right hon. Friend not agree that this package, with the hoped-for increase in growth of 3 per cent., when we take into account the propensity to save and to import finished and semi-finished manufactured goods, will have no impact on the indefensible level of unemployment?

Mr. Barnett: I do not accept that at all. My hon. Friend will know that the relationship between output and employment anyway is very difficult at the moment.

Mr. Thomas: Mr. Thomas indicated assent.

Mr. Barnett: I see that he does. Over the last year, there were forecasts that there would be more than 2 million unemployed because output was flat. In practice, despite an extra 170,000 coming on to the labour market, there has been a fall in unemployment, month on month, and an increase in vacancies. No one knows the answers to this, and I do not pretend to, but if that was the situation achieved when output was flat, I believe that with a 3 per cent. growth of output we shall see some further fall in unemployment.
I turn now to those others—I am not sure whether the Shadow Chancellor is among them—who feel a little unhappy that perhaps we have given too big a stimulus in the Budget. Those who are arguing in this way believe, I assume,

that a smaller stimulus would further strengthen our financial situation. But the other effects of a smaller stimulus would work in the opposite direction. For example, there would be lower levels of output and higher unemployment. Because of this, and a smaller improvement in net take-home pay due to smaller tax cuts, the chance of obtaining co-operation through moderation in pay settlements would be diminished and we should lose any slight benefit of the kind that those who would have wanted something less believe would have been achieved.
What we have done, on the best judgment that one can make, we think, has got it about right—with about £2½billion of tax cuts and a commitment on public expenditure out of the contingency reserve of about £550 million. This should set us on the road to increased output and a reduction in unemployment—a reduction that is sustainable and something that we can improve as and when we see an improvement in our industrial performance.

Mr. Higgins: This might be an appropriate moment to make the point that I wanted to make earlier, when the right hon. Gentleman put great stress on schizophrenia, from which he said we were suffering. Can he recall any previous Chancellor who was so schizophrenic as to reduce taxation at the same time as putting up interest rates?

Mr. Barnett: I never accuse the hon. Gentleman of schizophrenia: I was accusing his right hon. and learned Friend the Member for Surrey, East. As the hon. Gentleman knows, putting up an interest rate by 1 per cent. when our interest rates are lower than dollar rates is certainly not a means of increasing the rate of inflation. Certainly his right hon. and hon. Friends on the Front Bench do not accept that if we allowed interest rates to be too low and therefore allowed too fast an expansion of the money supply, that would help to keep down inflation.

Mr. J. Enoch Powell (): If the £2½ billion of revenue forgone is to be replaced by borrowing from the public of the same amount, where is the stimulus?

Mr. Barnett: A borrowing requirement of about £8½ billion is what we expect


next year—we cannot know with any certainty because the borrowing requirement has been, not only under this Government but under many others, £1 billion or £2 billion out either way because of the huge flows—but it depends how it is financed and it depends on savings and so many other factors. I know that the right hon. Gentleman likes to take these matters seriously. He takes a very simple and logical view of them, usually on a false premise, and it seems that he is doing the same now.
It is too simple to say that if we reduce the tax yield by £2½; billion, we shall necessarily have to borrow that much more. If we did, the question of how it was borrowed matters enormously. Thus, it is not quite as simple as that, as the right hon. Gentleman must know. However, he always likes to put the questions in a simple form.

Mr. Powell: I am grateful to the right hon. Gentleman for assisting my simplicity. If, as he has already admitted, the stimulus is not to be quantified at £2½ billion because it is only the part of it which is borrowed in a particular way which yields a stimulus, will he kindly quantify that part which is going to be so borrowed and which is going to be a stimulus?

Mr. Barnett: The right hon. Gentleman is asking impossible questions, because one does not know at this stage. All that I can say, as the Chancellor said yesterday, is that we intend to ensure that we shall not be borrowing that money in a way which will stimulate inflation—and that, of course, is within the power of Government. I am surprised at the right hon. Gentleman looking at the matter in this odd way. There is a variety of ways of deciding how the money should be borrowed. I know the right hon. Gentleman's views. He would probably prefer a smaller borrowing requirement. That is a perfectly respectable view to take. The trouble is, perhaps, that the right hon. Gentleman is not speaking from this Dispatch Box.
The right hon. and learned Gentleman the Shadow Chancellor did not tell us whether he thinks that the borrowing requirement is too high. I do not know what he did tell us. Certainly he did not tell us anything of an instructive kind.

Perhaps he would care to tell us now whether he thinks the borrowing requirement is too high. I see that he would not. What he did tell us, apparently, was that he would cut public expenditure, but he did not tell us whether there were any of the increases in public expenditure programmes announced yesterday by the Chancellor of the Exchequer that he would not have carried out.

Sir G. Howe: Does the Chief Secretary not understand that we voted against the planned increases in public spending set out in the White Paper a month ago, and that we would not be embarking on those increases which are adding £3·5 billion to the prospective borrowing requirement in the next year?
Does the Chief Secretary also not understand the warning I gave him that the borrowing requirement is dangerously large, but that in any event the solution to the problem of our economy does not lie in simplistic stimuli to the economy but in introducing a sensible tax structure which will encourage people rather than the economy?

Mr. Barnett: That is the oddest comment. So putting a few thousand million pounds more into the economy through tax cuts would not be a stimulus? That would be something different, would it? I see that it would. Would it? I must confess to the right hon. and learned Gentleman that I honestly do not know what he is talking about and, judging by their faces, nor do any of his hon. Friends. The right hon. and learned Gentleman was very open just now—rather more open than he was when we last debated public expenditure. I asked him then what elements in that public expenditure he would have cut. Now he is saying that he would have cut all the increases that we announced. I will look through them and see where those increases lay.

Sir G. Howe: I said in the debate on public expenditure that it was our view that the total of public spending should not exceed the real outturn in the financial year just ended. That is what I said then, and I repeat it now. It is by transgressing that that the Government are making their present error.

Mr. Barnett: That is very interesting. The right hon. and learned Gentleman is trying to get out of what he said


earlier. All he is doing now is to talk in generalities, without telling us where he would cut. [Interruption.] I am trying my best to give some credibility to the Opposition, and it is very difficult. The readers of the Daily Express want to know. They want to have some credibility from him. The fact is that the only areas of public expenditure, in the main, in regard to which the Opposition have been positive are where they would make increases. I refer, of course, to defence expenditure and to law and order. I read the speeches of the right hon. and learned Gentleman regularly and the only areas where there is reference to specific cuts in public expenditure are subsidies and transfer payments, as they are sometimes called.
Would the right hon. and learned Gentleman not have increased by £156 million the expenditure on employment measures? Would he not have increased child benefit by £165 million? I gather that he has welcomed it. Those are the two biggest items. Then there is the figure of £65 million for school meal charges. Would he put those up? The right hon. and learned Gentleman's hon. Friends are quite right to feel upset, because at some time or other he will have to answer the questions that he is not now answering. His hon. Friends are not getting the answers from their Front Bench. That is why the Conservatives are in this kind of difficulty, because they have no credible policy of any kind.
I now turn to the contents of the tax package. I appreciate that there are a number of questions about whether there should have been bigger income tax cuts offset by indirect tax increases, which I think one or two Conservatives had in mind. Should we have used all the relief for the widest possible band of reduced rate of tax, or should we have done it in a variety of different ways, such as cutting the basic rate and so on?
I should like first to say a brief word on tax avoidance, to which the right hon. and learned Gentleman referred. I am not referring here to the ordinary ways in which a taxpayer can arrange his affairs to the best tax advantage. I am referring to schemes of the kind which the Chancellor of the Exchequer had in mind yesterday—schemes which are totally artificial and with no real financial or commercial

result other than a fee for the organiser and a large reduction in tax to the detriment of all other taxpayers.
The schemes to which I refer are sold by people who have other schemes on the shelf ready as soon as one is countered. In the past, the House, reluctant as it is to approve retrospective legislation, has done so back to the date when the scheme was first detected. Unfortunately, there is always a period—which the vendors of these schemes lengthen by the level of secrecy which they impose—during which the marketers of the schemes and their customers benefit before the legislation can take effect. They know the situation and they plan accordingly.
I hope that the House will agree that this is wholly unsatisfactory, and that we can show those concerned that for the future the game is just not worth the risk. I propose that we should legislate in each case as it comes to our attention in such a way as to remove all tax advantage of a scheme from the outset. I believe that it will be possible to do this without harming those genuinely engaged in any commercial transactions to which these artificial arrangements may be attached.
As I have said, I understand the general dislike of retrospective legislation, but we are not dealing here with anything remotely like normal trading or even normal tax avoidance. These are operations which many, regardless of political views, will find repugnant. The tax stake is very large. We estimate that in the years 1973–74 to 1975–76 tax at stake from schemes detected are about £200 million. But in the last year or two it has escalated, and in 1976–77 the figure could be £200 million for one year. We know of one claim alone in which it is sought to establish a loss of nearly £100 million.
We owe it, I believe, to the millions of ordinary taxpayers to stop it. If in the process those who play with fire in this way get their fingers burnt, I hope that we shall shed few tears for them.

Mr. E. Fernyhough (): I wonder how many farm workers, how many miners, how many building workers and how many railwaymen were involved in this mean little cheating scheme which cost the nation £200 million.

Mr. Barnett: They are not little schemes, as I explained. Some of them are


very large schemes. One scheme alone involved £100 million. These are not for people of the sort that my right hon. Friend had in mind.
I turn now to the different ways that I mentioned in which we might have distributed the income tax relief that was available. On the first question of a switch from direct to indirect taxes—including even petrol, or perhaps not including petrol—I say at once that, provided basic necessities are excluded from the indirect taxes, I should like to make such a switch as soon as possible. But at a time when it is not only essential to bring down the rate of price inflation but to reduce expectations about inflation, among both wage negotiators and price fixers, there could not be a worse time at which deliberately to increase the rate of inflation.
The argument between the threshold and a reduced rate is finely balanced. It is true, of course, that raising the threshold takes more out of tax, but the reduced rate band of 25 per cent. creates a new marginal rate for about 4 million people. For this group of taxpayers 25 per cent. will be their basic rate. I see this as a start on the road to making it the basic rate in due course for millions more. I am very pleased that we have been able to do this and also to make a further small increase in the threshold. It should be recalled that this is on top of the October increase which fully indexed the allowances for 1978–79.

Mr. Ralph Howell (): Is the right hon. Gentleman aware of the intense disappointment on the Conservative Benches and in the country generally that the Government have not had the good sense to reduce the standard rate of income tax? Is he aware that what goes to those who benefit from the reduced band will be largely offset by the fact that they will receive fewer wefare benefits as a result of their paying less tax, and that the help will be generally cancelled out? Will the right hon. Gentleman tell the House the number of people that he estimates will be taken out of the poverty trap as a result of this Budget?

Mr. Barnett: I am not altogether clear about what the hon. Gentleman is saying. I know of the great interest that he takes in the poverty trap. The point I would

make is that since the 4 million people I am talking about will be paying 9 percentage points less tax in the pound than previously, that can only be helpful to those within the poverty trap.
With regard to a reduction in the basic rate of tax, I am sure the hon. Gentleman is under some misapprehension because that does nothing for people in the poverty trap. Each 1p reduction in the basic rate costs about £600 million in a full year. That would not help those in the poverty trap. I eventually want to see a reduction in the basic rate of tax, because it would help skilled workers whom I believe we should be seeking to help. But in a year when we are dealing with £2,500 million we want to help most those at the lowest end of the income scale—in which the hon. Gentleman has a great interest—as well as those on average pay.
I think it was right to do this largely through the reduced rate band and through doing a little more with regard to the threshold. I hope that when the hon. Gentleman has read what I have said he will realise that what we have done will do much more for those people in whom he takes such a great interest than if we had cut the basic rate instead.

Mr. John Roper (): Will my right hon. Friend clarify one point which has been raised with me today? When a married couple are both working will the £750 at the reduced rate apply both to the husband and to the wife?

Mr. Barnett: The answer is "Yes", because each of them gets his or her own allowance, and they are taxed separately, as my hon. Friend knows.
I should like to say a brief word about the top rates of tax. This should be seen in perspective. Even for a married man, with two children under 11, on a modest £25,000 a year, and on a reasonable assumption of a maximum mortgage, although his marginal rate of tax is high—I would not deny that—his average rate of tax will have been less than 50 per cent. Nevertheless, we have provided some relief for the higher-rate income earners. But I am sure that it was right in this year to concentrate our relief on those at the lower rates of income and on average rates.
Looking at the Budget as a whole, I think it will be seen that the tax cuts are well balanced to help those in the greatest need, particularly when one includes those helped through the new profit-sharing schemes, the help to the hotel industry, the farming industries and small firms. We were able to do a little more as well. We were able to take action on public expenditure. The departmental Ministers will be giving details, as my right hon. Friend the Secretary of State for Social Services did today.
I am glad to note that the expenditure increases announced yesterday were welcomed by everyone, including those who want to make the biggest public expenditure cuts. On the whole, despite what the right hon. and learned Member for Surrey, East said, his hon. Friends seemed to like the Budget, including the expenditure increases in programmes that were announced.
I believe that this Budget provides a tremendous opportunity. The situation has been transformed from what it was four years ago. I can understand the carping criticism of the Conservative Opposition when they see the prospects so much brighter than they have been for so long. The situation is enormously improved. We can now see output beginning to grow. Inflation has fallen to 7 per cent. and should stay there throughout the year. We have shown that we can control the money supply which will be kept within a range of 8 per cent. to 12 per cent. The balance of payments in 1978 is the best since 1971, and that year itself was a good year only because of what that Government inherited from the previous Labour Government. The borrowing requirement is within the IMF guidelines. All that is a very considerable achievement.
We have come through the worst world recession since the war, starting in our case with a nightmarish inheritance of February 1974. We can now—providing there is no danger of reverting to the confrontation policies of 1970 to 1974—see better times ahead. I commend this Budget to the House.

5.25 p.m.

Mr. David Steel (): The Chief Secretary referred

to his occasional meetings with my hon. Friend the Member for Cornwall, North (Mr. Pardoe) as a mutually beneficial teach-in. Certainly my hon. Friend has accepted that and the results were obvious in the terms of the announcements yesterday and today.
Indeed, if there remains a disagreement between us—as there does, and I shall refer to it later—it is not because we consider that there has been a failure of understanding or appreciation of our proposals on the part of Treasury Ministers but rather, as the Chief Secretary indicated, that there has been a failure of political inclination or will actually to carry them out, particularly in this year. I shall return to that in a moment.
I first want to deal with the speech of the right hon. and learned Member for Surrey, East (Sir G. Howe), who has explained why he has had to leave the Chamber. I make no complaint about that. He had quite a lot of fun at the expense of the Liberal Party. I make no complaint about that. He was described by one distinguished political commentator as "Mogadon man"—guaranteed to put everyone to sleep. I thought that was rather unfair because I counted only three Conservative Members asleep this afternoon. [HON. MEMBERS: "Four."] Moreover, the right hon. and learned Gentleman did not put me to sleep because I thought his jokes were a good deal better than his arguments. On this occasion his contribution was very lively indeed.
I have no objection to the Conservative Party taking the Liberal proposals and arguing vehemently against them, whether with ribaldry or with serious intent. I am sorry that I cannot return the compliment. We have had no Tory proposals in advance of this Budget which we could analyse, discuss and throw into the political debate. I had rather thought that we would at least get the benefit of the alternative Conservative Budget after the Government's Budget had been announced. Sadly, we were disappointed. We have to continue to conduct the political debate on how the economy should be handled without the benefit of the kind of published detailed proposals from the Conservative Party which we at any rate were willing to put forward into the discussion.
I want to begin by looking at the economic background against which this Budget has been constructed. If there is a marked shift in direction between this Budget and previous Budgets from the Chancellor it is surely because the economic background is now very different from that which we faced at the time of the last Budget but one a year ago. I have never subscribed to what I call the "Healey formula"—the calculation of the rate of inflation on a three-month basis. I am referring to the famous 8·4 per cent. figure. But since that figure has been used so much, if one takes that particular standard and looks at the situation a year ago one finds that in the quarter just before the last Budget—just before the Lib-Lab agreement was made—the annual rate of inflation was 21·6 per cent. In the equivalent quarter this year, ending in February, the equivalent was 7 per cent. By any standard that is a remarkable turnaround. The Chancellor himself said yesterday that he was hoping that that 7 per cent. figure would turn out to be the annual figure and not just the quarterly figure. I also hope that that will be the case.
If one is quoting these quarterly figures one should remind oneself that in the last quarter of the previous Conservative Government, ending February 1974, the rate of inflation was 18·9 per cent. At least on a short-term basis we have substantially reduced the level of inflation and we must hope that the economic programme of the Government will continue that trend over a longer period. All the indicators—mortgage rates, the value of the pound against the dollar, the balance of payments figures, and so on—are very much more satisfactory than a year ago.
I have no hesitation in saying that it the Lib-Lab agreement helped to create a year of political stability against which it was possible for this Budget to be of a rather different character and flavour from previous Labour Budgets, then my colleagues are due some of the credit.
I turn to three particular proposals in the Budget. The first deals with small businesses. There are some ten proposals dealing with this sector in the Budget. Yesterday, when the Chancellor talked about the contribution that the small business sector could make to employment and the development of the economy, a Conservative voice behind me asked

him when he learned that. The answer is that he learned it this year. I pay tribute to my hon. Friends the Members for Colne Valley (Mr. Wainwright) and Cardigan (Mr. Howells) and the Chancellor should pay tribute to his right hon. Friend the Chancellor of the Duchy of Lancaster because between them they have changed the whole attitude of the Government.
They have not just changed it from what this Government were doing previously—which was reprehensible anyway—but from what successive Governments have done over 10 or 15 years. As the Bolton Committee reminded us, this was not just a short-term discrimination against small businesses. We have been seeking positive discrimination in favour of small businesses, and I must admit that this Budget is riddled with such positive discrimination.

Mr. Nicholas Ridley (): How can the right hon. Member say that? Every single major recommendation of the Bolton Committee was implemented by the last Conservative Government. How can he ignore that fact when there were only two very small recommendations that I did not implement when I was a Minister?

Mr. Steel: If the hon. Member is still on speaking terms with his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) he will remember that he at least has been a bit more candid about the record of the Conservative Government, as far as the self-employed are concerned. Indeed, the facts speak for themselves. Whatever the hon. Member may say about what happened when he was a Minister, the truth is that there has been a decline in small businesses in Britain which has been going on under successive Governments. I hope that the Conservatives will pay tribute to the Government because at least they have taken particular steps to reverse the trend, and we welcome it.
The proposal on farm income taxation will be widely welcomed in the agricultural industry. Although it is right that the publicity for the restoration of free school milk for all primary school children should be on social grounds, because that is the most important argument, it should not be forgotten that this will be a great help for the hard-pressed dairy


industry, which has been arguing this case for some time.
The profit-sharing proposals to which Members of the Opposition have referred are a feature of this Budget. The Government have adopted the most radical of the three proposals in the consultative document. I welcome their choice and emphasise that this is the beginning of something for which Liberals have been arguing for 50 years. The Yellow Book of 1928 says:
The real purpose of profit-sharing is to show that the worker is treated as a partner, and that the division of the proceeds of industry is not a mystery concealed from him, but is based upon known and established rules to which he is a party.
That philosophy has gone unheeded for 50 years. It is no good the right hon. and learned Member for Surrey, East saying that it bears some resemblance to some report of some Conservative committee. We have had years of Conservative Government with no action on profit sharing at all. When this was mentioned, an hon. Member behind me was foolish enough to talk about the share option scheme. But the share option scheme was a scheme for top people. It was for company directors.
The £500 ceiling under this scheme makes it absolutely clear that this is a tax incentive scheme for the worker and the manager in industry. Some hon. Members may think that I ride a hobby horse on this particular proposal, and if I do it is because two years ago I visited some firms in the United States which have used tax incentives there. Talking to workers and directors in those firms I found myself convinced that what I have talked about in theory was working there in practice for the benefit of productivity and industrial relations. I was convinced that it was time it was transferred here more effectively.
As is well known in the House, ICI has had a rudimentary kind of profit-sharing scheme for some time. Recently it has had a committee of its own work people reviewing this scheme, and as a result the company is about to turn it into a far more effective scheme related to the value added in the company with the individual's reward relating to his position in the company on a fixed formula, so that the qualification at the end of my Yellow Book quotation will

apply. This will be a great improvement in the scheme. A large number of companies have been in touch with us, as I am sure they have been with the Treasury, asking what we are doing to give incentive to enable them to proceed with such schemes.
Some people say that the scheme is only a limited one and does not apply to the nationalised industries or to unquoted companies. However, if we have to wait until we can get a grand universal profit-sharing scheme for all of industry we shall never have anything. This is a limited scheme for a limited section of industry but it is, none the less, the first healthy step to identifying all the interests of profitability, and the rewards to industry throughout the length and breadth of the company.
In the economic climate against which this Government and the previous one have had to operate—namely, with wage restraint of different kinds, whatever one chooses to call it—the great attraction of the profit-sharing scheme at this time is that it is a way of rewarding people in private industry over and above any wage norm that has been established, whether by Government, by statute, or by agreement with the TUC. Therefore, it is particularly relevant at present as we all want to encourage savings and the spread of wealth. The proposals announced by the Chancellor—and they were already trailed in the consultative document—have not received the full attention and importance that they deserve.
On the question of income tax, it was agreed last July that there should be a shift in the burden of taxation away from incomes. I do not think that the Treasury has achieved this. The Government's take from income tax has increased anyway because of the increase in earnings and inflation, and this factor must be taken into account. It is arguable that there has been no real shift away from the burden of tax on incomes. Nevertheless, the Government are absolutely right to give priority, within the tax reductions, to the question of the poverty trap. This has been rightly and deservedly welcomed.
In our statement to the Government we suggested that there should be either a dramatic reduction in the standard rate


to 30p or the introduction of a lower rate band which could be widened in successive Budgets over successive years to become the new standard rate.
The Government rejected the reduction in the standard rate and, even more disappointingly, the lower rate band that they have chosen is so narrow at £750 that although the Chief Secretary talked of widening it in future years I believe that there has been a failure of nerve here in making a substantial reduction in income tax.
In view of the fact that the Chancellor has accepted that tax on income in this country is higher than in most of our industrial competitors, the reform of the taxation system is most overdue in this area. The incentive effect of having only a couple of pounds extra in the pocket is not marked enough to give the psychological stimulus for which we are looking. Perhaps we can return to this matter at the Committee stage of the Finance Bill, which should be very interesting this year.

Mr. Rooker: The right hon. Member should join us on that Committee.

Hon. Members: The hon. Member will not be there.

Mr. Steel: The hon. Member for Birmingham, Perry Barr (Mr. Rooker) must not claim his position on the Standing Committee during my speech. He may suffer a disappointment on this matter.
On the higher rates of income tax, I do not believe that very many people are affected by the very top rates. There are no votes in the issue. Therefore, what is the posture or the impression that we give to those who climb the ladder of success in their professions or businesses? It is intolerable that we should have such steeply rising rates of income tax culminating in 83 per cent. There is a strong case for making reductions there, particularly when the cost to the Exchequer is so relatively small.

Mr. Rooker: I agree with almost everything the right hon. Gentleman says, but surely there is no case for reducing the high marginal rate of 83 per cent. until we change the tax structure, so that we prevent the situation which has arisen in this Budget where even the welcome changes in respect of the low paid—changes which I wholeheartedly approve

—have led to a reduction in tax to the man earning £25,000 a year of £15 per week. That has happened as a result of the modest changes at the lowest end of the scale. Surely the right hon. Gentleman does not want to add to that by further reducing the high marginal rate.

Mr. Steel: So long as we have a tax structure which takes such a large proportion of the Government's income from income tax, it is bound to have that kind of effect. However, that should not deter us. Provided that we have tackled the problem at the lowest end, as the Government have tackled it, we should not be politically deterred from dealing with the problem of the confiscatory amount of taxation at the higher end.
If there are those in middle management—I am not talking about those who are affected by the 83 per cent. figure but of those in the middle and upper bands—who opened their newspapers this morning and read the new tax tables and are feeling disappointed with the Government, I hope that they will blame not just the Government but those who claim to speak for them. I do not think there is any secret between us that this is a matter on which we disagreed in our amicable discussions. The CBI and the British Institute of Management were pulling the opposite way from the Liberal Party on payroll tax. No doubt this is one reason why the Government have not acceded to our view that it would be possible to make substantial reductions in the higher rate provided that we had a 1 or 1½ per cent. surcharge on the employers' contribution to pay for it.
My hon. Friend the Member for Cornwall, North and I, in our discussions with employers in advance of the Budget, argued this case, and we found that our view was generally accepted. Yet the official spokesmen for that section of interest in the country—the CBI and the British Institute of Management—have been telling the Government the exact opposite. It is sad that the Government appear to have listened to them. Therefore, I hope that those who are feeling outraged will blame not only the Chancellor and the Chief Secretary but their own spokesmen for failing to accept a modest increase in employers' contributions as a means of paying for these taxes.
The Chancellor of the Exchequer referred to this matter yesterday and said that at a time of high unemployment this would be the wrong step to take. But when we are engaged in an exercise to try to keep down the level of wage inflation next year to a figure of about 5 per cent. and when we look back a year ago and remember that employers were facing wage increases of around 20 per cent., to talk in terms of 1 and 1½ per cent. surcharge is a modest contribution to ask them to make to what would be the restoration of differentials and a much better climate of opinion among middle management.

Mr. Anthony Nelson (): The right hon. Gentleman has honestly explained how he would finance a reduction in the higher rates of marginal taxation, but it would be worth while for the House to know exactly where the Liberal Party stands on this subject. Earlier he proposed a much more expansionist cut in the lower rates of direct taxation. Clearly, this can be financed only by a higher rate of borrowing, a higher rate of indirect taxation and more cuts in public expenditure. Which of those would he favour—and, if it is indirect tax, by how much would he increase it?

Mr. Steel: The danger of giving way on these occasions is that the hon. Member involved anticipates what one is coming on to say. Unlike the Conservative Party, we have published our proposals for better or for worse and they can be criticised, but at least they exist. I shall send the hon. Gentleman a copy of our detailed, costed proposals so that he can be in no doubt where we stand.
On the other hand, the Conservative Party is totally hypocritical on this matter. We had this afternoon the announcement, following yesterday's proposals, of a £1·36 billion increase in public expenditure in a full year on child benefits. The Conservative Opposition welcomed it and indicated their support for it. Yet that provision was included in the public expenditure White Paper, against which they voted and which was paraded with great virtue this afternoon.
The modest £40 million on education was derided by the right hon. Lady the Leader of the Opposition yesterday as hardly worth mentioning. Does that

mean that the Conservatives do not think it is enough? But will they vote against that public expenditure? Of course they will not. Will they vote against the £50 million for the National Health Service? Of course they will not. Will they object to extra help for the disabled or extra help for widows? Will they vote against home insulation grants for private homes, which we criticised the Secretary of State for Energy for not introducing? Again the answers are in the negative. The truth is that the Conservative Party is against public expenditure in general and in favour of it in particular. That is an intolerable position for any political party to adopt.
Let me seek to answer the hon. Member for Chichester (Mr. Nelson). Our proposal is that a shift in the burden of taxation should be made by putting more on to expenditure. I have mentioned the payroll tax. The other two items in our document included the standardisation of VAT at 10 per cent. That is attractive to many people not only because it has a relatively small effect on the retail price index but because it raises £710 million. That is a good deal of money to be able to add to income tax reductions.
Another proposition we put forward was for increased taxation on alcohol and tobacco. I, like everybody else, enjoy alcohol and tobacco, and I shall not be hypocritical or puritanical about it. But when we have a situation in Britain where 39 per cent. of drivers killed in car accidents are found in post mortems to have been drunk, surely there is a case when there is so much alcohol abuse at least to make sure that the duties on alcohol keep pace with inflation. Nothing has been done on that score in this Budget.
Let me take the sale of tobacco. It is estimated by some that there are 50,000 premature deaths a year and 50 million lost working days per year because of the effects of tobacco. Yet all we had in the Budget was a tinkering little proposal dealing with high tar cigarettes. The fact is that the new smoking material has been a commercial flop. No incentive has been given to encourage that material by increasing taxation on tobacco all round.
Nobody likes to pay these increases. They are probably the most unpopular proposals in the Liberal Party's whole


scheme. But I face that matter and I believe that it is wrong to regard expenditure on alcohol and tobacco as essential. If people had £5 or £6 more in their pockets each week as a result of income tax reductions, they would not worry about a little more on the cost of cigarettes or on beer.

Mr. Cyril Smith (): Will my right hon. Friend at this point in his speech make it clear to the House that if an amendment is moved to the Finance Bill to reduce the standard rate of income tax, Liberal Members will vote for it?

Mr. Steel: That is one option—either to reduce the standard rate or to widen the reduced rate band. That is what we said in our document. One of these is certainly what we should do in the Committee stage of the Finance Bill. Until we have recosted our proposals in the light of the Budget, it would be foolish to commit ourselves to any particular proposal, but one of these—even a widening of the reduced rate band or a reduction in standard rate—is certainly what we should pursue.
Some people then ask "What about those who do not earn? They would not benefit from these proposals." They instance, for example, pensions. We know that pensions, as we heard in this afternoon's announcement, are tied—or are supposed to be tied—to increases in earnings or increases in prices. Pensions and other social benefits would be geared to take account of these increases in the cost of living. I know that the subject is difficult, but I hope that some day some Government will be able to overcome the psychological difficulty of making announcements of pension increases in April and of having them paid in November. It causes a great deal of resentment among old-age pensioners and I wish that we could ally all our financial dealings to the April date so that we have announcement and payment at the same time.
Why have the Government not accepted our proposals on income tax? The answer is—they are quite blunt about it—the effect on the retail price index of adding them all together. It is said that if they were to adopt the whole of the Liberal proposals, 2·7 per cent. would be added to RPI. We were not suggesting that they should take the whole lot.
Over the years I have not been a regular contributor to economic and financial debates in this House. I leave that to my hon. Friend the Member for Cornwall, North whose expertise is much greater than mine. But as a lay observer of these debates I notice one peculiar feature. That is that across the Floor of the House from year to year different financial totem poles are erected before which we all have to bow down and worship. At one time it was the value of the pound. That was the stock thing. One judged the political success of a Government or Chancellor by whether the value of the pound was going up or down. Then the balance of payments became the great political talking point. We were always talking about how the balance of payments was doing month by month. This has now been replaced by the retail price index. We now all have to worship the index. It must be left absolutely pure.
It may be that the Chancellor of the Exchequer has a guilty conscience about the 8·4 per cent. figure that he gave before the last General Electoin. I see that he is shaking his head. He does not have a guilty conscience. I withdraw my explanation.
Of course the index is a standard and an accepted guide, but what is more important is whether people feel that living standards have been raised. The sort of proposals that we put forward would raise living standards and create the incentives that the rather timid and conservative approach to the Budget will not create.
Despite what I said earlier about the economic outlook compared with a year ago, we cannot disguise the fact that we are a country with high unemployment, low investment, poor industrial relations and low productivity and growth. That is not a good advertisement for how we have been running this country since the war.
It is the view of myself and my colleagues that the political and industrial system will have to change. We are glad to have helped in averting national disaster, but the time must come when we put our different views on these deeper issues to the electorate and invite it to judge.
There can be no long-term identity of interest between the Policies of the


Labour Party, its executive and its conference and the policies of the Liberal Party, and the time will have to come when these different policies are put to the people. This is not a Liberal Budget because it is not a Liberal Government, but it includes a taste of what Liberal influence can achieve, and we are happy to appeal for a larger influence when the next election comes.

5.52 p.m.

Mr. Michael Stewart (): My right hon. Friend the Chancellor of the Exchequer has been able to tell us that, after a few difficult years, we are now in a situation where most of our people are beginning to experience a moderate, but perceptible, rise in real living standards and that, given reasonable common sense and prudence, we can expect this rise to continue. In other words, we shall be living in a community where total real wealth is increasing. In such circumstances, part of the benefit of that increase should go to individual taxpayers through tax reductions and part should go to increases in public expenditure. The question is: what are the proportions to be?
The Leader of the Opposition set out yesterday her general philosophy that the proportion of the national wealth going to public expenditure should be progressively decreased. I invite the House to consider some of the results of such a philosophy.
The right hon. Lady and many of her colleagues draw a distinction between what they call the individual with money in his pocket, whom they picture as a flesh-and-blood creature, and a dead abstraction called the Government. They deduce from that picture that leaving money in an individual's pocket is always good and the collection of money by the Government and the spending of public money is always to be regretted. That approach completely misunderstands the nature of public expenditure in a society such as ours.
Let us consider some examples of where public money is spent. A large part of it goes not to some dead, impersonal creature called the Government, but to living human beings—pensioners, the sick, the disabled and recipients of social benefits of all sorts. If we take the view that the proportion of the national wealth going to public expenditure is to be

reduced progressively, the result will be that the gap between the income of men and women at work and the income of pensioners will be widened because the income of pensioners is paid out of public expenditure.

Mr. Nelson: Surely the right hon. Gentleman's analysis rests on a prophecy of static growth. If there is a real growth in the economy and the percentage that Government consumes is reduced, it is quite possible that, in real terms, public expenditure could increase and therefore many of the results that the right hon. Gentleman has proposed would not become a reality.

Mr. Stewart: The hon. Gentleman did not listen to the first few sentences of my speech. I pointed out that the Chancellor had shown that we have reached a stage at which we may expect a modest measure of growth. I said that in those circumstances some of that benefit should be passed on in tax reductions and some should go to increase public expenditure. The Conservative philosophy is that the proportion going to public expenditure should shrink. That is bound to mean that persons whose incomes depend on the level of public expenditure will get less, proportionately, than those whose incomes come entirely from the private part of the economy.
Whatever the absolute figures, the gap between the pensioner and the person in work will be widened. The gap between the man who always enjoys good health and the man with ill health will be widened. The gap between those in full possession of their faculties and those who are disabled will be widened. The contrast is not, as the Leader of the Opposition suggests, between flesh-and-blood individuals and a dead abstraction called the Government; it is between one set of individuals and another, or sometimes between one aspect of an individual—his aspect as a taxpayer—and his other aspect, possibly as a pensioner. If the philosophy of the right hon. Lady is pursued, it will become ever harder for Secretaries of State for Social Services to make the sort of announcements that we heard earlier. The funds will not be available.
It is not only pensioners, the sick and the disabled whose incomes are greatly


determined by the rate of public expenditure. The income of public servants is also greatly affected. If the proportion of the nation's wealth going to public expenditure is to be diminished, we shall be committing ourselves to the sort of incomes policy that always discriminates against the public servant. It will be harder to maintain the comparability of the pay rates of firemen, policemen, the Armed Forces, workers in the National Health Service and postmen. This cannot be dodged. Their incomes come from public expenditure and if the proportion going to public expenditure is reduced, their proportionate share will be reduced and the gap between them and people in private employment will widen.
It is not only pensioners and public servants who are affected. Some public expenditure is not on persons, but on such things as buildings and equipment, just as some private individuals' expenditure is on buildings and equipment.
If public expenditure as a proportion of the total wealth is always to be reduced, the gap in the quality of housing that is entirely privately paid for and that provided by local authorities will widen. This will give us a more divided nation. It will also be easier to provide for the dignity, amenities, comfort and efficiency of a hotel than for the dignity, amenities, comfort and efficiency of a hospital or a school. I cannot believe that that would be in the public interest.
It is important that the nation should realise that when people inveigh against public expenditure they are really inveighing against the pensioner, the soldier and the policeman, and the degree of decency and adequacy of hospitals and schools. They must make up their minds whether that is really what they want to do. I repeat that I am speaking all the time in terms of proportions.
If an economy is growing, one can have an increase in private standards of life and in the public services, but if we start off by saying that the proportion going to the public service must shrink, we put at a disadvantage the people whose incomes are from that source—the people who work in the public service—and we put the quality of buildings and equipment in the public service at an increasing disadvantage compared with everything else. I cannot believe that that is

the right policy. On reflection, I do not believe that it is what people want. It would provide us with a more divided and more resentful nation.
There is a further consideration that might lead us to think that as a society becomes richer there is a case for increasing the proportion of its public expenditure. We cannot expect a very poor and primitive society to do much to help the unfortunate. There have been societies so primitive that when their members reached a certain age they were literally thrown in the river, to the crocodiles, because society could not afford to maintain them any longer. The richer a society becomes, the more it can afford to provide for the less fortunate or for those who are past working age. Not only can it afford to do so; it ought to do so. We are becoming increasingly aware of this. After the great structure of the Welfare State had been laid in the years from 1945 to 1950, we became increasingly aware of the particular welfare problems that still needed attention. We have awakened comparatively recently to what can and ought to be done for the disabled.
If society is to grow richer I trust that we shall continue to identify particular needs of that kind. But we meet them inescapably through public expenditure. The money comes out of the taxpayers' pocket, goes through the Government machine, and comes out again as public expenditure, and it is none the worse for that. Therefore, if anything—one need not be dogmatic about it—there is a case for saying that the richer a society is the bigger proportion of its wealth it can and ought to spend on public expenditure if it has any conscience about the less fortunate members of society.
We should add that modern technology has been giving a new dimension to the problem. There have been plenty of Questions on the Order Paper recently about the provision of kidney machines—an expensive form of medical equipment. If nobody had invented them, if knowledge had not extended so far, the financial problem of providing them would not arise, but we know that knowledge is likely to increase. If we want to run our hospitals, our schools and many of our public services well, and if we want to use the fruits of modern knowledge, we shall have to be prepared to pay for it.
I am not advocating a society so austere that it never allows its increase of wealth to give anything for pure enjoyment of the citizen with money in his own pocket, but this doctrine that public expenditure itself is undesirable and that the share of it in the total economy should be reduced is a recipe for a divided, unjust, mean and unhappy society.

6.4 p.m.

Mr. Vivian Bendall (): I am grateful, Mr. Deputy Speaker, for your having called on me to speak in this very important debate. It is true that it is a pleasure to follow the speech of a person who is so well respected as the right hon. Member for Fulham (Mr. Stewart). It is a great privilege to be able to speak in the House representing the constituents of Ilford, North who have elected me to serve them here. This being my maiden speech, I therefore ask for the indulgence of the House.
I should like to say something about the House of Commons. When one first comes here one is extremely conscious of the heritage, history and background and of what the House of Commons and the Mother of Parliaments have meant to the British people. It has also given the world, over the years, a great sense of democracy. As a result of this, I think that this country can be rightly proud of many of the achievements that it has given the free world.
I pay tribute to my predecessor, Mrs. Millie Miller. It was unfortunate and untimely that her death should come in the way that it did. I suppose that it is always a politician's ambition to win an important by-election, but I do not think that it is any politician's ambition to have to win it through the sad and untimely death of somebody who died many years before she should have done. When I say that, I know that I speak for many people in Ilford, North who received a lot of help from my predecessor. I shall use my best endeavours to represent them as well and in the same way as they were represented by her.
There are matters that concern my constituents. One should not be controversial in one's maiden speech, and I shall do my best, because of the privilege of the House, to keep to that precept. However, there are matters which I think it would be wrong not to explain to the

House and which are giving my constituents some concern. Most of them revolve around the economy and the debate that we are having today on the Budget.
I remember during a by-election meeting a man in his early twenties. He was a skilled engineer in electronics. This young man was very concerned at the fact that not many other young men were coming into skilled industries. I asked him why this was so, and he told me that he felt that there was no longer any incentive. He said that there were no pay differentials. This question has been discussed in the debate.
There is also concern not only among skilled workers but among middle management and others about the size of taxation today. What gives me the greatest worry and concern is the fact that many of my generation and the generation following mine, great scientific and technical young people, have gone abroad rather than stay in this country. That is tragic for our nation, because those young people are our very future. Our very future is concerned with how and what will resolve our economic difficulties.
People are concerned about unemployment. We have two large firms in North Ilford—Plessey and Thorn—which are very concerned about the new clauses to Government contracts which might ultimately lead to unemployment if those contracts were lost through wage rises given by sub-contractors over which they had little control.
There is concern also among smaller business men. I am grateful for the Chancellor of the Exchequer's announcement of help to small business men, but I wonder whether, given the high rate of inflation that we have seen in the last three or four years, this will be sufficient to prevent more firms going into liquidation. We must remember that it is the small firms that still employ the largest number of people in our community and society today.
This leads me to the last two points that I want to make about my constituents' concerns. Widows have received a little help, but they will need a lot more help if we are to get things going in the right direction for them. People today, in spite of what is said by the media or by anybody else, are deeply concerned


about their future and the future of their families We must try to create a new spirit of adventure, a spirit that induces people to be successful.
I pledge myself to serve to the best of my abilities the constituents of Ilford, North who elected me, and I look forward to serving the House of Commons.

6.10 p.m.

Mr. John Cronin (): It is a pleasant task to be able to congratulate the hon. Member for Ilford, North (Mr. Bendall) on his excellent maiden speech. Hon. Members on both sides of the House were very much affected by his tribute to the late Mrs. Millie Miller. In addition to that, I think that he made an admirable speech and expressed it with a certain modesty and charm, which augurs for even better things when he has been longer in the House.
I think that everyone agrees that a new spirit is needed in the country. There would probably be some difference between us about how it could be achieved, but we would all accept that basic premise. I am sure that I speak for hon. Members on both sides when I say that we look forward very much to hearing again from the hon. Gentleman.
I must refer to the speech of the right hon. and learned Member for Surrey, East (Sir G. Howe) since he was expressing an official declaration of the policy of the Conservative Party. I think that my right hon. Friend the Chief Secretary got it quite wrong when he said that the right hon. and learned Gentleman was schizophrenic. There was nothing schizophrenic about his speech. I thought that it was entirely depressive. I felt that apart from those Conservative Members who actually fell asleep during the speech there was a total lack of enthusiasm from his own side for everything that he said, even though he produced all the well-worn Tory doctrines of cutting income tax and reducing public expenditure. I also noticed—I say this with regret—that the right hon. Lady the Leader of the Opposition, who was sitting beside the right hon. and learned Gentleman, displayed a lack of enthusiasm which was inimical to the right hon. and learned Gentleman's prospects.
The right hon. Lady is at present on a train bound for my constituency, the fair

town of Loughborough. I hope that she will tell my constituents that it is an important part of the policy of the Conservative Party that in the future those who are fortunate enough to have incomes of £50,000 will receive an extra £7,000 a year in their pay packets. This is the policy that we had ex cathedra from the Shadow Chancellor. That was the only part of his speech that evoked any enthusiasm. His spectacles flashed brilliantly when he produced the splendid doctrine that the upper levels of income tax should be reduced to 60 per cent.

Mr. Nelson: But the Liberals want that also.

Mr. Cronin: I do not intend to pursue the speech of the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel).
I believe that this excellent Budget is admirably adapted to our current circumstances. I sympathise with the leader of the Liberal Party—a party that wants to decrease taxation further, but it would be imprudent to do that at this stage. A £2·5 billion injection into the economy is, I believe, entirely satisfactory. It will give industrial activity and investment the right stimulus and it will help to reduce unemployment. I am happy to welcome the help being offered to small businesses, because that will make an important contribution to this end.
It is a pity that the minimum lending rate was increased to 7½ per cent., but at a time of prolonged weakness in the dollar when US interest rates will probably rise in the near future, it would be imprudent to have a substantial divergence between the interest rates on sterling and the dollar. The MLR rise is a commendable precaution, although it is one for which I cannot feel great enthusiasm.
I am delighted with the introduction of the lower tax band and the measures taken to avoid the poverty trap. I am sure that all hon. Members feel the same. Equally, I am delighted at the increase in child benefits. I recommended this move in the strongest terms in the debate on the last Budget. One likes to think—possibly erroneously—that one has had some influence on one's colleagues in the Treasury.
It is also satisfactory, although it is a minor part of the Budget, that there is to be increased duty on high-tar cigarettes.


Anything which reduces the genocidal activities of the tobacco manufacturers is to be welcomed. There is a case for making the duty very much higher.
It is disappointing that the Government have not seen fit to give more than £50 million to hospitals. The Health Service and everyone who takes an interest in the Service will regret that. The extra £40 million for schools, college buildings and the training of teachers was a somewhat miserable contribution, too.
I fear, however, that the Budget will not greatly assist this country's principal economic problems. I fear, too, that it is impossible for any Budget completely to correct those problems. The problems are the inflationary effect of wage increases without increases in productivity, poor productivity in industry generally, and the fact that expansion of the economy always leads to a big increase in imports.
On wages, it is all-important that negotiations for a stage 4 of wage stability should continue and should produce as satisfactory measures as possible. The majority of unions have accepted wage policy in a mood of moderation and responsibility. We all owe an enormous debt of gratitude to them for having done so much to maintain wages stability and reduce inflation to its present level. That could not have been achieved without the unions.
I hope that my right hon. Friend the Chancellor will persist in these negotiations and that we shall never return to free collective bargaining as it was practised in 1974. That would be disaster. It is Conservative policy to return to free collective bargaining, but I suggest that that would lead only to free collective chaos and to the situation in which the Government of the right hon. Member for Sidcup (Mr. Heath) collapsed in total disaster. I hope that we shall never again see that.
The poor productivity of British industry is largely due to lack of investment which stems from the timidity of British industrialists. No Chancellor can induce industrialists to invest if they do not want to. If industrialists did not see their way to making a sufficient profit, no fiscal incentives would induce them to increase investment. I see little hope for the future in that respect.
The other reason for poor productivity is over-manning and the various industrial disorders. Pre-eminent in this respect is British Leyland which epitomises poor productivity. To change that situation requires inducing the unions to change their attitudes. It is unfortunate that there is a tendency for trade unions to adopt an entirely adversary attitude towards industrialists. This is understandable, and I can sympathise with their doing it, but it is most important that workers should be brought into management and feel that they have a real say and a real responsibility.
I believe that we can get rid of the adversary attitude. Working people certainly do not have it in Germany or Japan. There is willing co-operation between the unions and industry in both those countries, with excellent results. It is important not only to have workers on boards of directors—I am not saying that I approve the whole Bullock Report—but to see that all the absurd class distinctions that are perpetuated in firms all over this country are abolished, also. There is a lot to be done in making the worker feel that he has part of the responsibility for maintaining our economy at the maximum possible rate, and is not thinking entirely of his own weekly wage packet.
I come now to the third problem—that expansion of the economy is always followed by a great increase in imports. So far this has been the cause of the economical stop-go situation that we have seen ever since the Second World War. There has always been a balance of payments problem whenever there has been a substantial expansion of the economy, and Governments have had to take appropriate measures to damp down the economy; so there has always been a tendency for the British economy to be kept down most of the time in that respect. This has applied to Governments of both sides of the House. North Sea oil will move that danger away for quite a time, in terms of our balance of payments.
What is most disagreeable about the propensity of the British people to buy imported goods is the effect that it has on unemployment, and this is the most dangerous situation of the whole lot. The situation was epitomised in a photograph that I saw in a newspaper a couple of


years ago, which showed workers arriving in bulk at a motor cycle factory for a meeting to protest against cutting down production of that factory's motor cycles. In that photograph one could see that most of the workers were mounted on Suzuki, Honda and similar Japanese machines. This is a situation which is certainly likely to get worse as time goes on.
I do not pretend to be an unlimited admirer of the department of applied economics of Cambridge University, but I thought that its Cambridge economic policy survey, which was produced last month, put forward very interesting and relevant figures. It was indicated on page 2 that since 1960 our exports have increased by between 4 per cent. and 8 per cent. per annum but our imports have increased by between 8 per cent. and 12 per cent. per annum in total, and it is mentioned on page 1 that British-manufactured products have hardly increased at all in total over the last seven years, whereas imports over the last seven years have increased by two and a half times.
The fact that imports have increased by two and a half times over the last seven years is a really substantial clue to one of the main causes of unemployment. The Cambridge economic policy survey goes on to say that if something is not done about these massively increased imports, unemployment will reach 5 million in the next 10 years. This is a staggering figure and it has probably caused some of us to feel some scepticism. One thing, however, must be very obvious, although it is a truism to say so. If imports go on increasing at the present rate there is no hope at all of reducing our unemployment below 1½ million and it is much more likely to rise, even if one does not accept the staggering figure given by the Cambridge economic policy survey.
What can the Government do about it? I appreciate that there are all kinds of arguments against protection. First, restriction of imports would be contrary to a whole series of system of alliances and agreements that we have made. I have in mind GATT and the EEC. Yesterday the Prime Minister made a good point in saying he would much prefer to see the whole world trying to expand without hindrance from protection imposing import controls. Of course, if we had real protection it would encourage inefficiency

in British industry. For instance, it takes a long time to get delivery of some Leyland cars. I cannot imagine what the situation would be if that company were completely protected and did not have to worry about Japanese and other foreign competitors. There is great danger of encouraging inefficiency.
On the other hand, these difficulties must be accepted, because unless we are to have a very large increase in unemployment we have to do something about reducing imports. I suggest to my right hon. Friend that this can be done, as it is already being done. At present we are having import restrictions of various types largely through voluntary agreements. I suggest that they must be continued. When the summit conference at Bonn occurs, further consideration should be given to additional import controls. This particularly applies to Japan, which is the principal offender, because although there is a general danger of reprisals being taken, we need not fear the danger of reprisals from Japan, which takes hardly any imports at all from us, whereas that country floods our markets with exports, particularly in the car and entertainment electronics industries.
I want to end by saying simply that I consider this is an excellent Budget but I hope that it is a long way from being the end of the road in terms of tax concessions and help to the underprivileged people. I hope that the next Budget—which I am sure will again be brought to the Dispatch Box by my right hon. Friend the Chancellor, either before or after the next election—will give much more help to retirement pensioners. I hone, also, that it will give some help to skilled workers and middle management by reducing the standard rate of income tax. This is today, however, an admirable Budget, which indicates that this Government's economic policy has been successful and will continue to be successful.

6.28 p.m.

Mr. Ralph Howell (): I want to add my congratulations to my hon. Friend the Member for Ilford, North (Mr Bendall) and say how very much we welcome him on the Opposition Benches. I add my congratulations to him for his great victory in that constituency, which has given great heart to the whole


country in knowing that we shall soon be shot of this wretched Government. I do not wish to argue with the hon. Member for Loughborough (Mr. Cronin), but I was appalled by his pessimism when he said that no Budget could cure the ills of this country. We have to find a way to rectify our problems, and later in my speech, with the lesser responsibilities of a Back Bencher, I hope to be able to put forward a few suggestions which I believe will remedy our basic economic ills.
This is the thirteenth Budget of the right hon. Gentleman and it is very much like all the rest of them. It is almost a non-Budget which will achieve practically nothing. I do not know how the right hon. Gentleman has the audacity to say this will remedy unemployment when all his other Budgets have done nothing except build up this huge unemployment figure still greater, ever since this Government have been in power. Even the figure of 1½ million is not the true figure, because there are at least 300,000 people hidden in non-jobs to make the figures look a little less bad than they are.
This Budget is nothing more than a repeat of the cruel charade through which we go on every occasion. If nothing had been done, we would have been paying £3,500 million more in tax next year than we did last year. The Government now tell us that they are to reduce taxation by £2 billion in this part-year and by £2,500 billion in a full year. In fact, they will be taking £1½ billion extra from us in the coming year.
The Chancellor's speech was full of half-truths.

Mr. Rooker: So was the hon. Gentleman's statement just now.

Mr. Howell: It will make no real impact on the poverty trap. Much of what the Chancellor said indicated that the Government believe that they are in some way curing the poverty trap. The Government have not grasped the extent of the poverty trap. It is not only people on low wages but those on average wages and above who are caught in the poverty trap. Depending on the cost of traveling to work, and so on, people with considerable incomes are caught. They find that

they are no better off than if they stopped work altogether.
From reading the Chancellor's speech, it seems to me that he believes that 4 million people will benefit from his lower-band tax rate. I do not believe that there will be any real benefit to the lowest wage earners. The money that they do not pay in income tax will be deducted from the means-tested benefits to which they are entitled. Therefore, just as many people will be caught in the poverty trap as before the Budget changes.
I should like to refer now to the idleness trap.

Mr. Rooker: I have great respect for the hon. Gentleman, but he is misleading the House. Many of the means-tested benefits are based on gross, not net, income. For that reason, what he said is the exact opposite of the truth.

Mr. Howell: That is not so. The hon. Gentleman knows enough about this subject—

Mr. Rooker: And so does the hon. Gentleman.

Mr. Howell: I know a great deal about the subject and have delved into it rather longer than has the hon. Gentleman.
Looking at the net spending power tables that we have had so far and shall have again in the near future, as soon as the Treasury answers my Questions, we will find that people at the lower end of the wages scale are no better off as a result of this lower band.
I also want to talk about those who are caught in the idleness trap. Many of the unemployed simply cannot afford to go to work, and everybody in this House knows it. We hear it at our surgeries. We should face this fact. There are tens of thousands or hundreds of thousands of people who cannot afford to work, especially in areas such as the low-wage area which I am privileged to represent. More and more people are asking themselves: why work?
I am thoroughly ashamed of the society that we have created. I believe that all hon. Members should be equally ashamed, because it is getting worse. More and more people are dependent on State handouts to pay their way. In fact they simply cannot pay their way.
I had four such people in my surgery on Saturday. Bills for electricity of £140 a quarter are coming through to people who are unable to find the money. Therefore, £1 a week is being deducted from their supplementary benefits. We are getting into bigger trouble, and we should recognise it. We should do something bolder than this Budget and even much bolder than the proposals that the Liberal Party has put forward to correct the appalling situation that we have created.
The trouble is that our income tax rates are roughly double those of our main competitors and partners in Europe.

Mr. Rooker: Rubbish.

Mr. Howell: That is not rubbish. The hon. Gentleman can argue this as much as he likes. The Chancellor in his Budget speech said that our income tax rates were the highest in the world, and they are.

Mr. Rooker: My right hon. Friend did not say that. He referred to the starting rate.

Mr. Deputy Speaker (Sir Myer Galpern): Order. I think that the hon. Member for Norfolk, North (Mr. Howell) should ignore interventions from a sedentary position and not be taken off his line of argument.

Mr. Howell: We must face the fact that our income tax rates are roughly double those of our main competitors. Our starting rate of 34 per cent. and top rate of 83 per cent. are double the American starting rate of 14 per cent. and top rate of 50 per cent. and the French starting rate of under 5 per cent. and top rate of 53 per cent.

Mr. Cronin: I think that the hon. Gentleman ought to bear in mind that income tax in Scandinavia and in Holland is higher than in this country. If one makes corrections for the difference in currencies, one finds that there is very little difference between income tax in this country and in Germany and France.

Mr. Howell: Hon. Gentlemen may argue this as long as they like. We are paying more income tax than any other country in the world, with the exception of Algeria, Portugal and one other State, which I cannot recall. That is the kind

of league into which we have got ourselves. I suggest that we should get ourselves out of it.
As a result of the lack of co-ordination between our taxation and welfare systems, we have created a treadmill society. The whole country is caught on this treadmill. We are not performing well. All the economic indicators prove that we are performing very badly. I believe that we should find a way of correcting this position before we drive more and more of our best brains and skilled people out of the country.
It is useless to criticise the Government without putting forward some tangible suggestions. First, we should see whether there is a better way of getting more in line with the rest of the world with our income tax rates. I should like the next Conservative Government to consider seriously having income tax rates similar to those of America, France and Germany and seeing what would happen. I believe that that would have an electrifying effect on this country.
We must also raise our tax thresholds well above any social security ceilings. To have this interlocking of benefits, whereby people are taxed at levels below social security and family income supplement levels, is totally absurd and wrong, because it dissuades people from working. All income should be treated similarly for tax purposes. There is no sense in the present complications with tax refunds, simply because some short-term benefits are exempt from taxation.
All this would cost a tremendous amount of money. To make any appreciable change in our position and to avoid pessimism of Labour Members would probably mean a switch not of £2½ billion, or the £5 billion that the Liberals have suggested, but of £10 billion. That is what it would take to get us out of our present impossible situation.
Other measures that we must consider include the introduction of a minimum wage. Why on earth Labour Members do not support this suggestion I cannot understand. They are always complaining about low wages. I believe that we should have a national minimum wage to rid us of the appallingly low rates that we have in this country.
One of the biggest causes of the poverty trap is our idiotic system for child benefit. Even now, after the changes this month, people in work with a family of three receive £6·90 for the children. When those people are first unemployed, the same children qualify for a payment of £13·50, and when they enter the long-term unemployment area they qualify for a payment of £23·30. This is a serious matter which must be corrected if we are ever to encourage people to work and make it worth while to work.
I believe that this Budget will do little to correct this country's ills. I look forward to a bold Budget from the incoming Conservative Government at an early date.

6.42 p.m.

Mr. Peter Hardy (): I am tempted to suggest that a searching examination be made of the various points put forward by the hon. Member for Norfolk, North (Mr. Howell), but if the hon. Gentleman were to see his speech subjected to that searching examination I think that it would make him extremely uncomfortable, in regard not merely to the points he made but the values that his speech embraced.
As for the high rates of tax, I do not share the apparent approval of massive reductions of the highest rate expressed by Conservative Members and, I think, by the whole Opposition. That is not because I do not accept that those rates are high but because I am not sure that any marked reduction would be particularly helpful.
In the past two years in my area we have broken industrial records in two or three works. We had the world-shattering development of a bar mill at Thrybergh, in my constituency, which slashed the world record in the speed of commissioning by a massive amount. If the people responsible for that could receive the benefit from tax relief, I would have no objection to their receiving it, on both sides of industry, but such a concession would not really assist those who create wealth. The best and biggest rewards in Britain today go to those who emphasise the frivolity of British society and to those who manipulate money rather than create wealth.
Therefore, those who deserve most are not likely to receive most. Those who should perhaps be ill-rewarded would be the ones most to benefit. Accordingly, I advise my right hon. Friend the Minister of State to be very cautious in listening to representations from the Liberals or any other quarter about that rate.
The Labour movement—we must have regard for it—embraces the principle of the redistribution of wealth. I believe that rewards must be great for those who can contribute greatly, but those who deserve little should not receive a great deal. The point made by my right hon. Friend the Member for Fulham (Mr. Stewart), that taxation is important if we are to have a civilised society, has been ignored by a number of Opposition Members, particularly the hon. Member for Norfolk, North.
I agree with the Leader of the Liberal Party that the Conservative Party has proposed no viable alternative. In that regard I am particularly pleased that my right hon. Friend the Chief Secretary spent a little time considering our economic history over the past 100 years. He was able to notice—it is easily discerned—that we have had inadequate success. That is because for the greater part of that century we have followed the approach that the Conservative Front Bench is demanding we should follow today.
It is not at all unreasonable for anyone on the Labour Benches to suggest that the consequences of the 1971 Budget are largely responsible for our ills today. The consequences of Budget after Budget in the latter half of the nineteenth century and the early part of the twentieth century are responsible for the underlying weakness of the British economy in the 1970s. Therefore, we are right to challenge the Conservative Party not merely for failing to provide adequate details about its financial policies but because it failed to realise—it does not even begin to understand—that its political approach has been largely responsible for the weakness that this country faces.
However, I suppose that we cannot expect that sense of responsibility to pervade the Opposition Front Bench. We had a rather ungracious response by the Leader of the Opposition in her prepared off-the-cuff comments yesterday, and a


similar response from the Shadow Chancellor today. I would have some sympathy with him—for all the people lined up behind him who want his job seem to me to be eager to repeat the mistakes of 1971—if he did not show evidence that he was prepared to repeat the example of 1971 as well.
It is rather sad that the Conservative Party today is adopting the pose of the compulsive gambler. Having lost its wagers in the early 1970s, it seems eager to place the same stakes on the same horse. While Britain may have a few more shirts in 1978, I do not want to see us lose the lot as a result of a repetition of Conservative profligacy after the next election.
I do not think that the British people will make that mistake, because the mood of the nation has been more easily, more properly and more accurately seized by my right hon. Friend the Chancellor than by the right hon. Lady. I do not think that the country wanted a reckless Budget, and it has not had one. It has had a relevant Budget. When I look at it from the background of the constituency that I represent, I can see the wisdom within it.
We need to stimulate our economy. We need to invest. I believe that my right hon. Friend the Chancellor today and in earlier arrangements has created a climate in which investment can take place. It has taken place in my constituency in the past year or two. Our unemployment is very high—well above the national average, but in two of the employment exchange areas in Rother Valley the unemployment rate is no higher than it was in 1972, before tremendous recession affected Britain and the rest of the Western industrialised world.
We have seen that investment because a number of firms have shown determination. They have been assisted by Government aid and by a sensible local authority. Heaven knows, we see that we could do with more of those when we look at some of the local authorities which are acting with gross irresponsibility, failing to spend that which the Government provide.
We have also seen that development because we have a sensible attitude of support for good industrial relations. My area should surmount its economic difficulties

to a large extent as a result of my right hon. Friend's further measures. If it does not, and if the failure to invest is even more extensive, I believe that before many years are out a General Election will have to be fought on the principle that the Government will have to have greater powers of direction to secure the creation of the wealth that we need. We can anticipate objections from Conservative Members.
I believe that there should be a mixed economy. However, if private industry in Britain does not seize the opportunities that the Government have given in the Budget and under previous arrangements, it will have no one to blame but itself if it is treated with a real measure of contempt.
Those comments do not apply to private sectors of industry in my constituency that have invested successfully and created many jobs. I want to see that attitude extended. I want to see the same attitude shown in other parts of the country. It would help, too, if local authorities in those areas took a more responsible attitude. If private industry will not seize the opportunities that are given to it, it must accept that it will be subject to a great deal of criticism in the years ahead. The country's future is too important to be left to the whims of those who have little aspiration and even less ambition.

Mr. Cronin: Does my hon. Friend agree that we are now approaching a crisis of capitalism, and that if the capitalist society continues in the present highly unsuccessful situation it will not survive?

Mr. Hardy: My hon. Friend is right. If capitalism wishes to survive, let it survive. The choice is now with capitalism. The Government have given directions to make it possible for capitalism to secure its own health. It is necessary to ask whether it has the will to survive. In my area a will has been shown, but my area appears to be untypical. I have extremely successful steel and coal industries in my constituency. If British industrialists had the will to invest anywhere in Britain, they would occupy some of the empty sites in my area that are available for industrial development.

Mr. Hordern: The Chancellor of the Exchequer claimed yesterday that the level of manufacturing investment in the


year past had been rather successful. I am sorry that the hon. Member for Rother Valley (Mr. Hardy) was not satisfied with that rate of investment. In fact, manufacturing industry has invested more despite the return that it is able to get on its investment having decreased ever since the Government came into power. Will the hon. Gentleman explain how he will get manufacturing industry to direct its investment at the Government's whim? Is he suggesting that the Government should take over all manufacturing industry?

Mr. Hardy: No, I am not saying that; I am suggesting that it is in the national interest that manufacturing industry should expand and invest. I was urging it to expand and invest. My right hon. Friend has made it possible for it to expand and invest. If it fails to do so, the national interest will require the Government to take action that the hon. Gentleman, and perhaps a great many others who are not supporters of his party, might deplore. The fact remains that a manufacturing base in Britain that is expansionist is essential, and my right hon. Friend is prepared to give it priority
I accept that there has been an increase in investment in the past year. However, that increase has been by no means adequate. Corporation tax is now almost a voluntary tax. There are many other inducements to undertake industrial development. It is disappointing that in my constituency, and in others of which right hon. and hon. Members are well aware, the private sector, with some magnificent exceptions, including both small and large businesses, has not reacted with greater enthusiasm. I do not want to labour the point, otherwise I shall speak for far longer than I intended.
I am delighted that extra money has been made available for the National Health Service. My right hon. Friend has applied the logic that hon. Members and the Labour Party in South Yorkshire were urging a few months ago on the opening of the splendid new hospital at Rotherham. I am particularly pleased about the improvement in national nutrition that will result from the provision of free milk for 7-to-11-year-olds. If we have adequate concern for the nation's health, that provision is necessary. It should never have been take away. It was removed

when the economic conditions did not require that degree of stern savagery. I believe that it will be helpful because it will support the important dairy industry.
I am pleased about the arrangements for tourism and agriculture. Although the Liberal Party is eager to take credit for the tax arrangements for farmers, I think that my right hon. Friend will confirm that measures were taken as much in response to representations from members of the agricultural group of the Parliamentary Labour Party as in response to other political organisations of less consequence.
I am concerned about the deficit in the public sector borrowing requirement, which provides the cloak for the appalling failure of Conservative local authorities. They have failed to build houses and failed to provide adequate services for their communities in a variety of sectors. Their constant excuse has been the Government's cash limits. My right hon. Friend knows better than I that those cash limits have been the excuse rather than the reason.
The local authority in my area has been able to provide splendidly without breaching Government cash limits. We should take a more careful view. We should call the bluff of some of the Tory authorities that are acting irresponsibly and rather dishonestly by seizing an excuse that is not an excuse. Their action seems to be unjust.
It is the action of Tory authorities that has led to the public sector borrowing requirement being £3½ billion less than forecast. If action is not taken by the Treasury in the months ahead, it will be the reason for the public sector borrowing requirement forecast not being reached in the current financial year. The Government should take a more flexible view. I do not think that it would cost very much money.
It will take us two or three years to recover the strength in local government that the Labour Party enjoyed in 1975. We shall obviously win many seats this year. However, I do not think that we shall win enough to take control of all the authorities that have served their communities ill. Our losses during our period of unpopularity were extremely heavy.

Mr. Hordern: It is not over yet.

Mr. Hardy: We shall see about that. I am tempted to continue for a long time but I shall not do so.
I believe that the British people were not in a mood for an electioneering, bribing Budget. They do not have an electioneering Budget. They have a responsible, relevant Budget. That responsibility and relevance will serve Britain well. I suggest that the House and the country would do well to take note of the point that my right hon. Friend was eager to stress—namely, that this is yet another phase in a continuing process.
My right hon. Friend used the word "recipe". I regard it as a recipe as well. It is a recipe for but one course of a continuing meal and a most valuable one. We have seen living standards rise in the last quarter of 1977. They rose by a greater amount than at any time for six years. Living standards will rise to heights that will have been well earned, to standards that have been set by a responsible and relevant Administration.

6.58 p.m.

Mr. A. G. F. Hall-Davis (): Before I turn to the main points that I wish to make I hope that I may be permitted one or two brief comments on the course of the debate so far.
The hon. Member for Rother Valley (Mr. Hardy) has referred to the crisis of capitalism. We have been uniquely unfortunate in Britain in the post-war period in that it is matters industrial that have been the main battleground between the parties. There is a heavy responsibility on both sides of the House to try to establish as much agreed ground as possible on the attitude of Government towards British industry. There are signs that is taking place. If I may say so, there are welcome signs as much from the Labour Benches as I hope there are from the Conservative Benches.
The top rates of tax have been referred to in passing by almost every speaker in the debate. I have always recognised the intellectual capacity of the Treasury in both its officials and usually its Ministers. Therefore, I do not despair in making what I hope are constructive and logical comments.
Whatever one thinks about the rates of tax, the one thing that strikes me is that it is totally illogical to aggregate the tax on unearned income with the tax on earned income. If one takes the example of a man who has acquired over his working life what would be considered in any other country a modest amount of savings, and if one then adds a 15 per cent. surcharge for investment income on top of a highly progressive rate on earned income, one finds that if he aspires to the highest success in his profession or occupation, one lands him, on his quite modest investment income, with tax at 98 per cent. In effect, it is saying to him that by his efforts in his work he is destroying totally the value to him of the income from his or his wife's savings, because in this system there is no separation of aggregation, no right to opt for separate taxation of investment income for husband and wife.
I move to what I hope the Minister of State will regard as four constructive suggestions arising out of the Budget situation with which we have been confronted. I believe that two of these suggestions would help to revitalise the economy. I believe that they will be given serious consideration by Treasury Ministers, and possibly sympathetic consideration. I believe that the other two suggestions will improve our social services while making possible, or certainly helping to make possible, a lowering of direct taxation.
I must say at the outset, however, that these latter two suggestions are so contrary to Socialist doctrine that, whilst I believe that the rational case for them is irrefutable, I am quite sure that the irrational doctrinaire response of the Labour Party's Left wing will mean that they will never be accepted by a Labour Government. All the same, I have a right and duty to draw attention to them.
My first point concerns profit sharing. This has a part to play in securing the identification by employees of their own welfare with the success of the firm for which they work. It will help to improve industrial relations, and I think that, particularly, it will encourage observance of procedural agreements. The avoidance of frequent stoppages, which too often occur without any use being made of the procedures agreed between unions and employers for the resolving of disputes,


would do a great deal to improve the competitiveness of British industry and its reputation abroad with its overseas customers.
I believe that the improvement of our competitive ability can be brought about only by pursuing a number of courses at the same time. There is no single panacea for Britain's industrial problems. I am not therefore suggesting that profit sharing is a panacea, but I believe that it has a part to play.
The point I put to the Minister of State this evening, in advance of the drafting of the Finance Bill, is that the value of the contribution of profit sharing will be directly related to the freedom that the Government are prepared to give to those engaged in wage and salary negotiations, on both sides of the negotiating table, the freedom that they are given to apply it in the way that they believe is in the best interests of the firm and its employees.
I readily accept that in political terms there must be a limit to the amount allowed in any one year. I think that £500 is a very reasonable limit. In fact, I should be inclined to describe it as rather more generous than I expected the Government to offer. But I ask of the Government that they should avoid writing into the Finance Bill detailed restrictions on how profit sharing should be applied, and that they should leave it to the employers and unions to agree on the form of profit sharing and what conditions should be applied in their particular case.
For instance, in some cases they may feel that it should be highly geared to an increase in profits. I would think that if it were adopted in a company such as British Leyland, in the position of British Leyland today, that might be highly desirable. In other companies they might feel that it should be devoted to encouraging the maintenance of existing profit levels.
This need to give freedom to industrial negotiators on profit sharing brings me to my next point. The Chancellor was notably reticent in his Budget Statement on the question of pay policy. He said—this is the only time that I shall quote him, but I think that it is helpful—
the main responsibility here again must continue to lie with the trade unions and employers

who actually negotiate on pay".—[Official Report, 11th April 1978; Vol. 947, c. 1189.]
Last year, very late in the day, the Government laid down a 10 per cent. guideline. It was quite clear at the time when the statement was made that it was intended as an average. But it quickly became a minimum figure for settlements and, therefore, it became a maximum at the same time. This left no scope for the adjustment of differentials or for extra inducements to be given to respond to market demands. It is my personal experience that this rigidity has placed a great strain on industrial relations. If it is continued after 31st July, it will gravely restrict the ability of industry to be flexible in its response to export opportunities, and it will make it much more likely that the increased home demand that the Chancellor foresees will be met by a damaging inflow of imports.
It is my view—this is a personal view—that it is worth accepting a slight extra price rise and possibly a slightly higher average level of pay settlements in order to protect the balance of payments by the increased flexibility and efficiency of industry and the improvements in industrial relations that would result. If the Government are serious in their wish to return to genuinely free collective bargaining, I suggest that there will probably not be a more favourable opportunity than exists in the current year.
My final comment on this point is that in any case, whatever the Government's policy is to be, the Prime Minister or the Chancellor of the Exchequer should make the Government's stance known well before the end of phase 3 and should not repeat last year's cliff-hanger, which was certainly of no help either to employers or to trade union negotiators.

Mr. Peter Viggers (): My hon. Friend will have observed that paragraph 3 on page 12 of the Red Book, under "Assumptions", says:
The forecasts assume that average pay increases in the year beginning in August 1978 are about half the average for the current pay round.
Does my hon. Friend agree with me that in view of pressures of pent-up frustration and demand within the pay structure at present, it is quite unrealistic to expect that pay increases will be half those of the previous round—in other


words, that they will be 5 per cent? After all, who is to stand still to allow the Armed Services, the police, the fire services and all the others who have pent-up claims to overtake them?

Mr. Hall-Davis: I thank my hon. Friend for drawing attention to that paragraph. In view of my earlier comments, I would rather not fall into the trap I am suggesting that the Chancellor should avoid by making any forecasts myself of what would be reasonable. But perhaps it is fair to comment that after the Chancellor's experience of yast year, one would not expect the Government to pitch the figure any higher than they think might be credible.
I move from industry to the social services. It is an accepted feature of taxation policy in Britain, pursued under both the major parties, that the Government should give a number of tax reliefs to encourage what they consider to be socially desirable expenditure by individuals. The relief that comes most readily to mind is relief on mortgage interest on loans up to £25,000. There is tax relief on life assurance premiums and relief on payments to provide pensions, whether the payments are made by companies or individuals. Yet it is a striking feature of our taxation system that there is no relief for those who wish to provide for their children's education or their family's health care without making demands on the State system.
One often hears the cry "privilege" about non-State education from many members of the Labour Party. Yet the present system confines the option of private education to the very high earners or those with capital—and, as the years go by, almost entirely to the latter. The education service would be improved if encouragement were given to those who wish to provide education for their children outside the State system. I am not saying that they should opt out of their contribution to the State system—of course they cannot do that—but they should be encouraged to relieve the burden on it.

Mr. Hardy: Would the hon. Gentleman not agree that many areas of private education benefit greatly from charitable status? Would he also accept that many of us do not regard them as charities?

Does he regard the public school institution as a charity?

Mr. Hall-Davis: As the hon. Gentleman may have sensed from my remarks, I tend to take a pragmatic view of these things. I would say that anything which relieved the burden on the taxpayer and made better State education possible was welcome. In lieu of tax reliefs, I am not opposed to charitable status. That is a pragmatic, rather than a logical, attitude.
In health provision, not only people in the Labour Party but many members of the public have an obsession with queue jumping. That is typified in the attitude of another North-Western Member, the right hon. Member for Blackburn (Mrs. Castle). I can understand this feeling. My father was a general practitioner in Bolton in the heart of industrial Lancashire, and I grew up with some sense of what privilege in health care could mean.
But the way to get rid of queue-jumping is not to lengthen the queue by making everyone join it but to relieve the pressure on the present limited resources of the NHS or to increase the resources. I still hope that Labour Members will grasp that the best way of eliminating queue-jumping is to get rid of the queues. The NHS is currently functioning only by putting undue pressures and work loads on its staff.
The community health council which covers the Lancaster district, in which part of my constituency lies, was so concerned recently about the position that it could see developing that members of its outpatient, clinics and support services panel visited a considerable number of wards and departments in the hospitals of the district at a number of different times of the day to gather factual information. In the resulting statement, which is not peculiar to my constituency but is typical of the problems of the NHS, the council said:
The principal conclusion to be drawn from the information and impressions gained on these visits is quite indisputable, namely that the level of nurse staffing throughout the district is too low. That catastrophe has not yet occurred must be attributed partly to good fortune but, to an even greater extent, to the devotion to duty of individual members of the staff. This is the reality of the NHS. It cannot give the care, either in hospital or in the community, that would be within its powers if it were properly financed, staffed and equipped.


Later, the statement said:
We therefore recommend
(1) That the Secretary of State be reminded that under Part 1 of the National Health Service Act 1946, a comprehensive Health Service be provided in the Lancaster Health District.
In the face of that situation, instead of penalising health expenditure by individuals and companies to provide care outside the NHS, the Government should be encouraging it.
I close with perhaps a more radical proposal. It has always struck me as the tragedy of the NHS that, although this is the one public service which almost everyone is willing to pay for, the mechanisms of revenue-raising and Government spending stand in the way. Instead of talking about the arguments for and against an increased national insurance surcharge, as the Chancellor did yesterday, the Treasury for once—I know that this is a fundamental suggestion—should abandon its objection to the hypothecation of revenue, which for the layman is the earmarking of a particular tax or levy for a particular purpose.
I should like the Treasury to place a health charge on the employer in order to ease—not entirely to remove: that would be too much—the financial problems of the Health Service. That should be accompanied by a greater involvement of people with business and industrial experience—both employers and unions—in the operation of the NHS. It is intolerable that the British people should continue to have a service which is deteriorating at a time when they are prepared to meet the cost of a service of which the whole nation could be proud.

7.17 p.m.

Mr. Bruce George (): I am glad that the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) touched on health and private education, because I know one fee-paying school in the West Midlands with a high academic reputation which cannot open its doors until the filth in its kitchens is cleaned up by order of the environmental health department.
I welcome the Budget, as I am sure will the majority of my fair-minded constituents. The commitment of the Government to British Leyland this week will greatly affect my constituents, many of

whom are indirectly employed in companies providing British Leyland with components or making the machine tools. In conjunction with the Budget, which will stimulate industry, that is greatly to be welcomed.
Unemployment in my constituency is 4·8 per cent.—well under the national average—but that disguises the underlying problems of the local economy. Ironically, within about a one-mile radius of the centre of the town of Darlaston in my constituency, four companies have recently announced that they are laying workers off—GKN (Nuts and Bolts), Carringtons, Wellman Cranes, F. H. Lloyd. I trust that the impetus created by this Budget will save and create employment. I hope that the Budget will stimulate the engineering industry in the West Midlands, which will benefit the economy as a whole.
This is not an electioneering Budget. The Chancellor realises that the ordinary working man is not an unsophisticated oaf. He cannot be bought for beer, as votes were bought in the last century. It is a responsible Budget. Even if it were an electioneering one, we hold no patent on that practice. When the Leader of the Opposition talks about electioneering Budgets, she seeks to give the impression that we have a monopoly. The history of the 1950s and 1960s is testimony to the stupidity of that sort of analysis.
I want to deal mainly with one aspect of the Budget—assistance given to the hotel and catering industry—and to the related tourist industry, which is vital for our economy. It employs in all sections probably over 3 million people. It is important not just in attracting foreign currency but, as society becomes wealthier, in meeting the increasing demands which our own population will make.
This is a very important industry, and I welcome the £15 million boost that the hotel industry has been given in the Budget. The Press today was quite ecstatic in its response to this aspect of the Budget. The Guardian talked about small hotels in the regions getting a boost, and said that
The hotel and tourist industry welcomed Mr. Healey's provisions giving 20 per cent. initial capital allowance on the cost of building new hotels or extensions to existing hotels


with over 10 bedrooms. They are also allowed a writing-down relief of 4 per cent. annually.
One of my local newspapers, The Birmingham Post, writes today:
Hotel industry set for a boom".
I very much welcome the Chancellor's provision for the industry. I do not think that my own constituency of Walsall, South will be the centre of any tourist boom. It may not rival other parts of the West Midlands in its pleasing aesthetic appeal. Nevertheless, I think that hotels in the area will benefit, particularly because of our relative juxtaposition with the National Exhibition Centre.
There is an impressive list of incentives which have been given to the hotel industry over the last 10 years to stimulate growth. I criticise the Chancellor's £15 million cash boost to the industry on the ground that it is not tied to any provision that the industry must put its own house in order. I am not criticising the industry en bloc. There are some excellent hotel companies and some excellent establishments of which they and we can be very proud. Regrettably, however, the excellence is not very widely spread. Indeed, it is very thinly spread.
The hotel and catering industry has some of the worst employers in the country. They exhibit many of the manifestations of nineteenth century employers. Some of them would put to shame the nineteenth century mill owners. I believe, therefore, that this major grant, which I welcome, should have strings attached to it. That section of the industry which is not meeting the standards that ought to be required of it should be compelled to put its house in order. There should be rather more than a gentle stimulus to it to improve its practices.
Both private research and Government statistics show that wages in the industry are among the lowest in the country. A number of the low-paid employees in the industry will very greatly welcome the tax concessions, especially the increases in child benefit allowance and the decisions about school meals.
The hon. Member for Norfolk, North (Mr. Howell) pointed out that many working people are deliberately choosing not to go to work because of the disincentive. There may be truth in this assertion in some instances, but I put to the hon. Gentleman very seriously that he underestimates

the strength of the work ethic in this country. There are very many people who would be much better off at home, on social security. But we must not forget the stringent checks which are made by the Department on people who wilfully refuse to go to work. The majority of working people, despite the low wages that they are enjoying—or not enjoying—are prepared to go out to work, and I do not denigrate people who fall within this category.
Wages are depressingly low in the hotel and catering industry. In many cases industrial relations are appalling. There are employers who pay over the minimum and there are employers who earn the respect of their employees, but regrettably many do not fall within this category. Many employers resist trade unions with every means at their disposal. I deplore this. Only about 11 per cent. of the work force in the hotel and catering industry is unionised. I hope that the unions will make a very much more significant impact on the industry than they hitherto have been able to make.
There is another defect of the industry which should be removed, either by means of the Chancellor's measures or by anything which could be done by my right hon. Friend the Secretary of State for Employment. I should like to see the weapon of dismissal, which is used so frequently in this industry, blunted. I have been looking at a publication of the highly respected Hotel and Catering Industry Training Board. In a guide for managers, speaking of industrial relations, it states in very moderate terms that
the hotel and catering industry is one in which the weapon of dismissal has been frequently used".
That is an understatement. Dismissal is one of the weapons used by management to keep out trade unions and to coerce the work force. We have not to go very far in London to see manifestations of the problems in the hotel and catering industry. Some of the disputes have been highly publicised. We have read recently about the sufferings of top people in Claridges and of their Dunkirk spirit on £60 a day. In some ways I sympathise with them, but I sympathise more with the people in dispute with the management.
Here is an example from some of the reports which I have received. In this


case, of which I have no personal knowledge, a young man sought to form a trade union and was dismissed. This is the weapon used. The management usually has a battery of excuses when dismissing any worker who seeks to form a trade union.
A dispute of which I have personal knowledge is that involving Garner Steak Houses, officially called Monseigneur Grills. I spent four days in representing a worker who was unfairly dismissed 18 months ago. I represented him with all the skill of the district attorney in the Perry Mason series. We lost. I could not prove the allegations that were made, yet it gave me a direct knowledge of this company and very much regret that the work force is in dispute.
Once again, the problem has been caused by the attitude of the employers to the work force seeking to get unionised, on this occasion the T. and G.W.U. The attitude of the employers is to resist trade unions at all costs. In those circumstances, bitterness arises. Indeed, it is a scar on our London scene that so many establishments are being picketed by the workers, who feel that there is discrimination against them.
I have a report from some workers in this dispute who state that they have been trying to get the union recognised. It points out that they are repeatedly threatened by the management. The management is prepared to close down altogether rather than recognise the union, despite the fact that more than 80 per cent. of the staff are union members. They state:
We are mostly immigrant workers, working in an industry that is traditionally unorganised, and where employers are violently anti-trade union. If we win this will be a great boost for all workers in the hotel and catering industry and for the trade union movement.
I do not think that any responsible employers in the hotel and catering industry and in the tourist industry should resist so strongly the growth of organised trade unions. It is not, in my view, in their interest to do so, because trade unions are highly responsible bodies. I want to see stability in the industry and also profitability. I am not speaking as someone who seeks to knock the industry and to put it down. I want to see the industry expand. One way in which it

can expand is by the Government having a commitment towards it. Obviously, the £15 million is adequate testimony to its importance in the Government's thinking.
Wages in the industry must be improved. In the Garner Steak Houses dispute the document sent to me refers to waiters who received from the company a weekly take-home pay of £28 for a compulsory 55-hour week. A 70-hour week was and is quite common.
Wages, therefore, must be improved. If wages are improved, morale will also improve. The report of the Hotel and Catering Industry Economic Development Committee refers to staff turnover, and one can see the astronomical costs to the industry of so many people voting with their feet and clearing off. Very few establishments keep their staff beyond 12 months because the wages are so low. The conditions are Dickensian. Staff are often sleeping in sub-standard accommodation. It is necessary to improve and to cut down on staff turnover. Official reports have shown turnover to vary between 38 per cent. and 200 per cent. The trade unions must be recognised. Management must be improved. Let us hope that the Hotel and Industry Training Board and the Hotel and Catering EDC will be able to promote and stimulate change in the quality of management, not just in the large companies which need quality management but in the small companies as well.
If all of these things are done we shall see a healthy, viable and contented industry. When the kitchen staff, the waiters and the chamber maids are contented with their lot, obviously the customer will benefit. I ask the Chancellor of the Exchequer to have discussions with the Secretary of State for Employment and to seek by any means at his disposal to promote beneficial change in the industry.
Let us get away from the scandal of these disputes which are now taking place in London under our very noses. I hope that ACAS will produce its report on Garner Steak Houses very swiftly. Why does not the Secretary of State for Employment seek some form of committee of inquiry into the hotel and catering industry, its wages, conditions and industrial relations?

Mr. Margolis: , the chairman of Monseigneur Grills, is reported in Time


Out to have said that he sees himself as the George Ward of the catering industry. I do not want to see the hotel and catering industry suffering in the same way and being the object of daily disputes on television as Grunwick has been. But that is what we shall see. We shall see disputes such as the one in Claridges spreading elsewhere. There has already been an indication on the tapes of the Press Association that the dispute will spread. How long do we have to wait before this industry is put on to a proper footing, one under which these disputes will be eradicated so that we can have an industry of which we can be proud?
I very much welcome this Budget. It has a number of aspects that I regard as highly desirable. It is not an electioneering Budget. I ask the Chancellor in future to consider the use of financial measures as a carrot or a stick to induce this industry—many aspects about which we can be satisfied and many about which we can rightly be nauseated—to improve. If by dangling a carrot or waving a stick we help bring about this change, this will be greatly to the benefit of the community as a whole as well as to the industry.

7.33 p.m.

Dr. Alan Glyn (): I hope that the hon. Member for Walsall, South (Mr. George) will forgive me if I do not pursue him down the corridors of Claridges. I agree with him on one thing; clearly this is not an electioneering Budget. It is a neutral Budget. It is unexciting. It does not do much harm, but it does very little good.
About 4 million taxpayers out of 20 million are affected, but affected marginally. I certainly would not suggest in any way to the Government that this was an election bribe. I do not believe that those taxpayers will be fired with sufficient enthusiasm to alter the position of their cross on the ballot paper when the General Election comes. I would not be surprised if there was not another Budget before the election.
I wish to emphasise three points. Does the Budget do three things which to my mind are in the forefront of the minds of most electors? The first relates to the extraordinarily high rate of unemployment—the highest since the 1930s. Does it tackle that? What about industrial production? I am not certain of the

figures, but I understand that industrial production is at approximately the same level as four years ago. Will the Budget stimulate that? I do not think so.
I asked the Chief Secretary a fortnight ago what the rate of inflation was last year compared with 1973–74. I did not get an answer. I do not know whether it was 8½ per cent. I do not believe that this Budget will do anything to reduce inflation, which is what we all want to see. Only time will tell whether I am right or wrong. The Chief Secretary was right when he said that no single factor would affect these very important issues, but a combination of factors could affect them.
I turn to the question of taxes. Many hon. Members are sad that there has not been a reduction in the standard rate of income tax. Such a step is justified because we must have some incentive for people—especially the skilled workers and the self-employed. To retain this high rate of taxation is a positive disincentive.
My chief argument against the Budget is that there is no shift from direct to indirect taxation.
We got a spark from the Chief Secretary. He said that he was not actually opposed to this suggestion, but that this was not the right time to carry it out. I have never known any time when it was right to introduce a change. But this is one of the most important methods by which we can stimulate incentive and enterprise in this country. People should be allowed to take home their wages almost without any income tax deduction. It should then be up to them to decide how they spend it. If they want to spend it on buying a new television, or on drink, or if they wish to save it, they should be allowed to do so. In other words, it should be up to the individual to say how he wishes to dispose of his income.
Over a period of years I should like to see a shift from direct to indirect taxation which gives the individual the right to choose how he wishes to pay his taxes.
My second point about taxation relates to VAT. I believe that it would have been right to have a single rate, not so much because it raises more money but because it is very much easier to administer. It causes much less difficulty, especially to the small man, if he knows that there is a single rate and that he does


not have to differentiate. I do not think we should continue with differential rates of VAT, for that reason. If we had a rate of 10 per cent. I believe that it would raise another £700 million, but administration is the point that I wish to bring home to the House.
I turn to the question of the surcharge on invested income. This is a very sore point. Many Labour Members think that invested income is derived only from inherited money, but many of my constituents are people who have been employed—many in jobs, not in their own businesses—and have saved all their lives out of taxed income. They have then accumulated a sum of money, which they have invested in order to derive an income from it. They are being taxed twice. For Heaven's sake, why can we not treat invested income in the same manner as any other form of income?
We all must welcome the increase in pensions. However, I should like to to make one point. I hope that my figures are correct. When we look at the present pension rate we must remind ourselves that the value of the pound is only 52 per cent. of what it was when the Conservative Government left office in 1974. Therefore, we must divide the pension by two in order to convert to 1974 values. That is something that the House should remember.
I turn to what I regard as possibly the most important item in the Budget—the question of small businesses. The leader of the Liberal Party suggested that the Chancellor had listened to his entreaties on this subject. I suggest that the Chancellor listened to something else. Perhaps he took a walk up to Carey Street and saw how many small businesses had gone to the wall in the last four years. When the Chancellor of the Duchy of Lancaster went around the country he might well have told the Chancellor of the Exchequer "Look here, there are a lot of votes in this". Indeed there are.
I am not accusing the Government of vote catching. What I am saying is that I do not believe they are doing enough for the small business man. They have given him a little mitigation—too little, too late. But if we want to build up the industry of this country we must encourage the small business man. The number of forms that he has to fill in must

be reduced. In many cases he is on his own, or with perhaps one assistant. He finds it extremely difficult to compete with the complex and difficult forms as well as the administration which he is required to perform as an unpaid tax collector.
As this is such a vital section of industry we must turn our attention to it. If we can increase the number of people in small businesses we shall be doing something towards reducing unemployment in this country.
There are many small businesses which, to my knowledge, are doing very well. When one asks the small business man why he does not expand he says that he is frightened to do so. He points out that he has a good business but that if things turn a bit difficult in his field he will be unable to sack anyone. The fact is that employers in small businesses are reluctant to expand because of the Employment Protection Act. They are reluctant to take on more employees.

Mr. Rooker: It was, of course, always the intention of the Conservative Government, who introduced the Industrial Relations Act and the unfair dismissal procedures, to reduce the time during which an employee could work for a company before he qualified under the unfair dismissal procedures. Lord Carr is on record as saying that the 104 weeks was introduced only to get the system going so that there was no administrative backlog. We have only carried through the intention of those who introduced the unfair dismissal procedures. This is really not a party point.

Dr. Glyn: I agree with the hon. Member that this should not be a party point. Like many other hon. Members, I went through these Lobbies night after night on that Act, and I admit I was not really all that keen on it. The fact remains that many people in this country are reluctant to expand good businesses because of the unfair dismissal procedures. The House should consider this point, because we are trying, in a way, to increase employment and if we continue with radical disincentives we must think very carefully about the way in which they will operate on small business men, to whom we look for increased production.
I welcome the concessions on agriculture and the contribution to law and order, small though it is.
I want to make a point about the premium on working—a point that has been raised several times already. It is quite true that many hon. Members in this House have constituents who write and tell us that at the end of it all they are better off not working. The hon. Member for Walsall, South was quite right when he said that there are many people who, although they are getting less money, choose to work. But there are others who say that they cannot afford to work. This is an area at which every Government must look extremely carefully.
I wish to raise the question of temporary employment. I believe that we must go not for short-term employment but for a much longer and more permanent solution. We realise that help is needed in the short term, but we do not want to see the short-term employment scheme go on for ever. This is something to which careful consideration must be given.
Mention has been made of comparisons between ourselves and other Western European countries. I do not think that such comparisons are very satisfactory. For one reason, we have the added advantage of North Sea oil. When we take our economic position into consideration, it is almost as if we are working on the basis of not having North Sea oil. We should regard North Sea oil as a bonus. The oil, or, rather, the proceeds from it, should be used for looking for alternative sources of energy, either in the nuclear field or somewhere else, to boost our industrial capacity so that when the oil supply ends we shall be in a position to compete with other European countries.
We must try by tax changes, by indirect and fairer methods of taxation, to create the incentives necessary to build up our society, to recognise thrift and hard work and, as Churchill said,
To produce that net below which no one should fall.

7.45 p.m.

Mr. Douglas Crawford (): I want to speak about the Budget from a Scottish point of view, but first of all I want to make a general remark about this so-called give-away Budget. The newspapers have been filled

with talk of "give-away", "boom" and "bonanza", but the Chancellor has merely given back to the people what they have put in, and he has not given back much of that.
There has been much talk of the improved economic background to the Budget and the Government have been taking the credit. But, as the hon. Member for Windsor and Maidenhead (Dr. Glyn) said, one of the reasons for the improved economic background is North Sea oil. In Scotland we are starting to see the beginning of the rip off of Scottish resources and the beginning of the big hand-out. The Budget gives back to the people about £2½ billion. It is no coincidence that this is roughly the projected take from Scottish oil annually in the next few years. There is something almost immoral about using Scottish resources as collateral for the largesse that the Chancellor was distributing yesterday.
I quote here from Mr. Peter Balfour, who is the new chairman of the Scottish Council, and by no means could he be regarded as a member of the Scottish National Party. He said on 9th March:
The bonus of oil revenue must not only be invested to secure our long-term position, but should also be separately identified and accounted. It should not be allowed to disappear like some maxi road fund into the maw of the Treasury and disappear without trace. Nor should it, in my view, be used to finance programmes in which the Government would have been obliged to invest anyway, but should be spent on imaginative new products which would otherwise be beyond our capacity to finance.
If the Budget is about anything it should be about the stimulation of industry. Quite frankly, this Budget will not stimulate industries in Scotland, large or small, to the required degree. We have almost 200,000 unemployed, which is the highest figure since the war. We need industrial investment and to get that the motivation must be right.
The Chancellor said a lot yesterday about this problem, but he did not offer any practical, empirical solutions. He described the destination, but he did not say very much about the road, and he has not done anything to make the passage along that road to the destination any smoother. It is all very well to say that we must get up earlier and work harder, but exhortation is not enough.
The Chancellor said a lot about small businesses, and these businesses may well say "For this relief much thanks." However, the Scottish National Party wanted the Chancellor to do two things and these things have not been done. We shall seek to insert them during the various stages of the Finance Bill.
The first of these provisions is that the levy on the self-employed imposed by the Conservatives in 1973 should be abolished. I repeat that that was introduced by the Conservatives in 1973. The second provision that we want to see is the raising of the threshold at which VAT becomes payable from £7,500 to £15,000. The Chancellor is proposing £10,000, but we believe that it should be raised to £15,000. There is no reason why very small businesses should be required to act as unpaid tax accountants for the Government.
The Chancellor said a lot about the National Enterprise Board but not a single word about the Scottish Development Agency. There is a viable and urgent need for the budget of the SDA to be raised to at least £300 million a year. In a letter to me on 8th March the Chief Secretary said:
Your only suggestion is that the Scottish Development Agency should be given an extra £300 million in a year as a starter. You do not say what the Agency would be expected to do with it, or how this starter would do more than the Government's measures to increase employment in Scotland. We have no evidence that the level of funds available to the Agency is inadequate"—
tell that to Clydeside—
or is preventing it from taking steps to assist in dealing with Scotland's deep-seated economic problems.
The SNP does not take that view. Scotland may or may not get what the Treasury considers to be fair, but we do not get a fair share of our own resources as seen from a Scottish point of view. This Scottish point of view is one which more and more people in Scotland are coming round to share.
An example of what could be done for Scotland is plain for all to see across the Irish Sea. The country with the highest growth rate in the EEC is the Republic of Ireland. Last year the Irish Industrial Development Authority gave grant assistance to industrial projects creating 24,000 new jobs. That is not a lot, but it is a great improvement for Ireland. A

total of 12,000 of those jobs were stimulated from existing industry and 12,000 came from overseas.
The Industrial Development Authority's target was 23,000 jobs. It was said that the fact that the target was surpassed was due to two factors—one a stepping up of the IDA's promotional activities at home and overseas and the other the increased budget which the Irish Government had given to industrial development authorities. I do not accept the Chief Secretary's view that the Scottish Development Agency would not know what to do with an increased budget. If the Republic of Ireland can become one of the fast-growing economies in the EEC, I do not see why Scotland cannot emulate that country.
There is another industry in Scotland which is suffering—and that is whisky. Time and time again in this House the SNP has sought to get the duty on whisky lowered. We have been opposed by the Government, and the Conservatives have been apathetic and have abstained, apart from one or two honourable exceptions. The SNP has warned the Chancellor that he cannot tax this industry any more or the goose will not continue to lay any more golden eggs. We have consistently in the appropriate part of the Finance Bill over the last three years sought to reduce the duty on whisky.
Let me quote what the chairman of the Scotch Whisky Development Committee, Adam Bergins, said recently:
Last year was the first time since 1969 that the total amount of Scotch whisky sold throughout the world did not increase in comparison with the previous year. We have not yet received figures for the whole of 1977, but releases from bond for sale in the home market in the first 11 months of the year amounted to 13,400,000 proof gallons.
That was less than 17 per cent. less than in 1976. He continued:
The Chancellor told Parliament that the additional revenue raised by these measures would amount to £280 million in the financial year 1977–78. Financial commentators reported that the Chancellor looked to spirits to contribute £20 million of that extra.
But what happened? During the financial year just ended, because the duty has been so high, the total Government take fell last financial year by £28 million.
The tax cuts in general are not enough for Scotland. I calculate that they represent about 3 to 4 per cent. That is not


enough even when set against the Chancellor's suggestion that inflation this year will come down to only 7 per cent. Individuals are given the illusion of tax cuts without the reality.
As for companies, apart from smaller companies, the fact that there has been no cut in corporation tax will in no way assist investment and job creation in Scotland. There is now, more than ever before, a need for a separate Scottish budget. I realise that the Conservatives helped us a little way along this road during a Division on the Scotland Bill when they accepted our suggestion that the Government's pay policy should not run in Scotland. We were very grateful to have the Conservative and Unionist Party's support. I presume that they made another of their mistakes, but that provision was deleted from the Scotland Bill, and presumably it will remain out.
We are beginning to see the start of some kind of different economic strategy in Scotland. The fact that the rather restrictive pay policy operating in England is not to be extended to Scotland is a welcome step in the right direction.
The Government and the Liberal Party have made their proposals, but we still do not know what are the Conservative Party's proposals. Let me read into the record the SNP's proposals. [HON. MEMBERS: "Hear, hear."] I am grateful for that support because after the next General Election hon. Members will have to deal with one or two more SNP Members.
The first proposal is that the duty on whisky should be paid at the time of sale and not when it comes out of bond. This would incur a once-for-all cost of £80 million. These costings are not mine, but are contained in a parliamentary reply.
The second proposal is that duty on whisky should be reduced from its present level to that pertaining in March 1975. The present duty is about £3·16 per bottle and in March 1975 the figure stood at £2·57. This would cost about £75 million.

Mr. Rooker: Since the hon. Gentleman is dealing with the subject of whisky, does he agree with the remarks in the recent report by the Comptroller and Auditor General to Parliament referring to the massive tax fiddle that is taking place

because of the removal of large samples of whisky from bond? That was in a report presented to the House in February. Does the hon. Gentleman wish to see that loophole closed?

Mr. Crawford: Most certainly we are for closing such a loophole. We are interested in jobs in the whisky industry, and if there are tax fiddles that reduce the number of jobs, we would be totally in favour of closing such loopholes.
We suggest raising the threshold at which VAT becomes payable from £7,500 to £15,000. This would cost in Scotland £3 million per year. We also suggest a reduction of 2½ per cent. in corporation tax. That is not very much, but it would give a psychological boost to investment in larger companies. We also suggest—and I know that my hon. Friend the Member for Dunbartonshire, East (Mrs. Bain) will agree with me here—the abolition of taxation on the basic rate of widows' pensions. Although we welcome the increase in pensions, the SNP believes that the rise is not great enough.
Nobody should say that Scotland cannot afford these measures. The climate is right and a notable comment on the situation was made two months ago by Mr. Jeremy Morse, the chairman of Lloyds Bank:
Scottish independence would be more likely to lead to increased investment in Scotland.
He said that when he was opening a branch of Lloyds Bank in Edinburgh. He continued:
Whatever the political outcome of the present trend in Scotland, it is enough to make an international banker say 'Can we be in 43 countries and not be in Scotland?'
The climate in Scotland is ripe for expansion. The sooner Scotland can get away from the dead hand of the Treasury and London, the better. It cannot come too soon. More and more people in Scotland are not prepared to see the revenues from their own resources being used to pay off debts which Scotland did not incur in the first place.
What the Chancellor has done for Scotland is to give us a few crumbs from our own very rich table, and we are expected to be grateful for them. Hon. Members may laugh, but it is not so long since the SNP had only one representative in this House. It will not be long now before a Scottish Chancellor will


come to a Scottish Parliament in Edinburgh and bring forward firm financial proposals which will utilise Scotland's vast resources in a way that will increase investment and drastically reduce unemployment in Scotland. For the unemployed, for small business as well as large, and for investors that day cannot come soon enough.

7.58 p.m.

Mr. J. W. Rooker (): This has been an interesting debate so far. It is a great pity that it has not been broadcast live. The public should have been able to listen today to Conservative Party policy. However, they would have discovered that now that we have passed the stage of off-the-cuff remarks, we still do not know the state of Conservative Party policy.
The only concrete proposal came from the right hon. and learned Member for Surrey, East (Sir G. Howe). He wanted to ensure that the man earning £50,000 a year had a tax cut of £140 a week—in other words, he wanted to give such a man a tax cut of £7,000. That was about the only firm proposal that we had from the official Opposition—a party which pretends to put itself up as a future Government. The Conservatives will be walking totally naked into a General Election—although I do not think this is an election Budget—in terms of policy. The public will not know what the Tories really stand for.
It has already been said that the Conservatives are in favour of public expenditure cuts in general but not in favour of specific cuts. They will not oppose any of the proposed increases put forward by the Chancellor, but they never make their policy clear, except when they seem to imply that we should reduce nurses' wages in order to give the doctors more. They never dare spell out their proposals so that the public can draw conclusions from their comments.
I wish to ask a question of the Treasury Front Bench, and I hope that it will be answered in the Minister's reply. It relates to the background of the Chancellor's speech yesterday and to the work that goes on behind the scenes. It has been put to me that while my right hon. Friend's speech was broadcast live on the radio, his words were flashed up on the

television screen so fast that the media must have had prior knowledge of what he was going to say. I hope that we can have a categorical denial that the speech was given to anyone in the media before it was made.

Mr. Norman Lamont (): May I suggest another question that the hon. Gentleman should put to his right hon. Friends? He is making an extremely important point, but another extraordinary feature of the Budget was that important matters were not referred to at all in the Chancellor's speech. Hon. Members had to collect all the bumph that was available only to journalists in order to discover, for example, that the minimum repayment required of credit card holders had been altered. A number of matters were not told to Parliament.

Mr. Rooker: I accept the implication behind what the hon. Gentleman said. I had to collect this great load of bumph from the Vote Office to discover changes that the Chancellor had not announced.
There is a great myth about Budgets. The Chancellor need not have bothered to say half of what he said. Even though his speech was shorter and less confusing than usual, all the clichés and initials that were used give the impression to the public that there is a great mystique about Budgets, that we are all clever "bods" and that only Ministers and Shadow spokesmen really understand these matters and only they should be allowed to get involved in affairs of State. If my right hon. Friend had left out all the things that he need not have bothered to say, he would have had more time to tell us about the things included in the bumph, some of which were extremely relevant.
Of course, there are some things that no Chancellor would ever say. No Chancellor would point out that, because of our crazy taxation system, the effects even of a Budget that is largely directed towards the working poor has a spin-off that leaves the rich to get away with a lot of tax cuts.
This is the first time that I have spoken in a debate in which there has been a maiden speech. I do not want to comment on the speech of the hon. Member for Ilford, North (Mr. Bendall), but my hon.


Friends and I were extremely grateful for the generous way he spoke about our late colleague, Millie Miller.
We have seen two reputations completely smashed today. The first—it probably goes without saying—was that of the right hon. and learned Member for Surrey, East. This is probably the last time that we shall hear him leading for the Opposition. He had nothing to say, and his colleagues were almost falling asleep. The look on the face of the Leader of the Opposition showed that she had got the message. The right hon. and learned Gentleman's performance was well below par—even for him.
The other reputation that has gone out of the window is that of the hon. Member for Norfolk, North (Mr. Howell), who has built up a considerable reputation for expertise and knowledge about the working of the poverty trap. I am sorry that he is not here. I have not left the Chamber, so I have not had the opportunity to inform him that I intended to refer to his speech.
The hon. Gentleman had built up his reputation in a way that appealed to my hon. Friends. Until today, he had been wholly constructive and had not sought to use the information and problems about the interaction of the social security system and the tax system to attack the Welfare State, as his hon. Friend the Member for Aberdeen, South (Mr. Sproat) has done.
I hope that the hon. Member for Norfolk, North will read his speech, because he showed that he did not understand the working of the poverty trap. He said that people would not escape from it. He clearly did not understand that some means-tested benefits depend on gross income and, if there are tax reductions, people will be better off and will not lose benefits, because their gross income will remain the same. He also followed the example of the hon. Member for Aberdeen, South, of attacking those who cannot defend themselves even outside the House. These people have too few spokesmen to put their case.
The hon. Gentleman also sought to use wicked smears against those who are in the dole queue for no reason other than the way that the economy has been run in past years. There was nothing about those who go to work knowing that they are probably a little worse

off than they would be on the dole. There was no comment on that from the so-called champion of those in the poverty trap. The hon. Gentleman's reputation as an hon. Member who can speak with authority, responsibility and care on this matter has gone straight out of the window.
Before the Budget I sought not to get involved in any auctioneering on what the size of tax cuts should be. Like my hon. Friend the Member for Coventry, South-West (Mrs. Wise), I have been under considerable pressure about what we would like to see. It is not the role of any Back Bencher, or any Minister except Treasury Ministers, to decide how to apportion the blocks of cash between public expenditure and direct tax cuts.
My hon. Friend the Member for Coventry, South-West and I took extreme exception last year to the disposition of the tax cuts. I take no exception this year. I was delighted to see the combination of increases in the thresholds and the introduction of a lower rate band. It was clear that the Chancellor could not do both adequately. We could not have a really broad band, because that would have used up all the money, and I wanted to see the thresholds raised, even if only a little, because that will take some people out of paying tax altogether and it is important that we should seek to do this. I accept that, because of what happened in October, we could not have full indexation.
The Chancellor's combination of changes is highly significant. It gives us the opportunity to build on the lower rate band, not by spurious amendments to the Finance Bill but by allowing future Chancellors to build on it responsibly. We have achieved an important principle. Of course, the Opposition do not like it.
There was a headline in the Evening Standard last night which said that the lowest rate of tax was down to 25 per cent. It was only in one edition, and was neatly changed later, because it was, no doubt, thought that it looked a bit too pro-Labour. All later editions were changed, and I had to buy a copy of the early edition because copies were not available, as the headline had been changed so fast. It upsets the Tory Party when the Tory Press can make this brief, succinct analysis of what the Chancellor has done.
My right hon. Friend said that the marginal rate of tax for many millions of people will be only 25 per cent. He gave the figure as 4 million, and we have to accept what he says. Obviously hon. Members will seek to probe this in Questions to see the slight changes that affect wage and salary scales.
It is no good the Opposition decrying what the Chancellor has done and saying that the lower band will apply only to part-time workers. For many people, working part-time means the difference between total poverty and a semblance of a reasonable standard of living. The change will benefit people such as the woman who has to go out to work in the afternoon or evening because her family commitments prevent her doing otherwise.
In addition, those on very low earnings in wages council industries, where employers pay below the legal minimum and full-time workers get a pittance of £45 a week or less, will also receive considerable benefit. It is hypocrisy for the Opposition to say that the change will not affect many people.
I enjoyed much of the speech of the hon. Member for Windsor and Maidenhead (Dr. Glyn), but he was wrong to say that the lower band will affect only 4 million taxpayers. All 20 million taxpayers will be affected, and I shall show later the effect on one or two bands.
The other part of the Chancellor's announcement about which I was deeply pleased was the bringing forward to November of the increase in child benefit. There has been considerable public and private Labour Party pressure on my right hon. Friend to do this.
The warning shots across the bows had already been fired. Unfortunately, no one knew about it, because the Order Paper had not been printed. The Early-Day Motion tabled last week entitled "Parliament and the Inland Revenue" did not get the coverage that it should have had, but I think it likely that the Treasury took its content on board. It sought to draw attention to the House and to the Inland Revenue and its staffs that from last week the lower child tax allowances were being operated without parliamentary approval. This was made clear in the leaflet to the taxpayers.
My right hon. Friend the Financial Secretary nods. Everyone might have known about the programme, but there was no legislative authority for it. If the child benefit increase had not been brought forward to November it might have been difficult for the Chancellor to get through a clause in the Finance Bill giving effect to the child tax allowances which had already been put into operation. That was our point. We said that if no approval were given, we would not expect any complaints from the Inland Revenue, because it knew what it was doing in implementing the scheme without approval.
I accept that this was the broad plan of things, but it had got to a point at which the family support operating at present was such that in October or by the end of the year—by the time the tax changes had filtered through—the family support in 1978, in real terms, would have been considerably less than in previous years, from both Governments. We were not prepared to tolerate that. The point has been made and accepted. We on the Labour Benches are extremely grateful and I know that most Conservative Members feel the same. The recipients will be even more grateful, because it is to them that the benefits will accrue.
What was missing from the Chancellor's speech was some reference to the Mead Report, because the Chancellor did not want to spend a lot of time telling the public what a mess our tax system was in with its interaction with the social security system. I do not accept all the recommendations in the Mead Report; far from it. But there are many important recommendations in it to which I thought the Chancellor might have paid a little attention. The analysis of the poverty trap was extremely cold and clinical. The highest marginal rates of tax are not paid by the wealthy at 83 per cent. or 98 per cent.; they are paid by the working poor at 106 per cent. in some cases. Account has been taken of this sort of analysis.
There was an important analysis of the change to expenditure taxes. The report said that one could do this unless one had a good and workable wealth tax and an inheritance tax.
Those are all good Labour Party proposals that we have not put into effect. That is one reason why we do not hear


very much about the Mead Report from the Conservative Party. It contains a lot of good recommendations that happen logically and fortuitously to have long been Labour Party policy. I hoped that the Chancellor would say something about that.
On the subject of closing some of the tax loopholes, I imagine that we shall have many speeches from the Conservative Party and from leader writers outside saying that it is a constitutional outrage because it is retrospective legislation. But, as my right hon. Friend the Chief Secretary made abundantly clear, the people who have benefited have been playing the game. They knew what the convention was in this place and they adjusted their tax schemes accordingly. There is one scheme that my right hon. Friend referred to in which £100 million of tax is at stake—tax that should rightfully have been paid. That is quite outrageous. The public have a right to know who is trying to perpetuate this rip off on the taxpayer. All the taxpayers pay for it. So do the pensioners and those on hospital waiting lists, because there is less money available for everybody else.
Some of the loopholes are well known. I should imagine that it would be very difficult for the Tory Party in Committee to oppose some of the changes that my hon. Friends are to propose. What has been happening is totally immoral. We are not talking about moonlighting jobs. We are talking about massive sums of money. Wimpey, the building firm, for a fee of £2·8 million, got rid of its whole corporation tax liability of over £18 million the year before last. That is the way in which large companies are operating. They are just paying a small fee, with no tax. It is not illegal to do so, but it is a totally artificial scheme and is seen as such by everybody else when it is discovered. By then it is too late to do anything about it. Therefore I welcome the element of retrospection, which has caught these people on the hop because they thought that it was going to be retrospective only to announcements late in 1977. They will be caught as far back as early 1976.
A speech was made by the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) about the effect on the National Health Service, in which he advocated more public subsidy to the private sector of the service. One would think

that the private sector was self-sufficient. It is not. The public do not know much about this, but the nationally funded blood transfusion service collects blood from donors all over the country, delivers it, keeps it, converts it and supplies it free of charge to the private sector and the National Health Service with no handling charges, let alone charges for the blood.
I do not want the American system here, in which people sell their blood. There is much hidden subsidy in the private sector, and the hon. Member wants even more. Many examples such as this could be quoted throughout the system.
There is a point to which I want to draw attention, because probably no one else will. On balance, this Budget has been for the working poor, and as such I totally applaud it. It shows up our crazy system of taxation. I want my hon. Friends to promise to do something about this in the future. As long as the present system exists they will not be able to meet the argument about the high marginal rate of tax. I will not go to the wall defending the status quo. If someone earning £20,000 a year—£400 a week—obtained from a Budget a tax reduction of £11 a week—this is from a Budget that benefits the working poor—without any of the tax rates changing, it shows how much he would gain if the tax rates changed.
A system must be introduced so that Labour Governments—because it will only be Labour Governments—who want to introduce Budgets in favour of the working poor—the majority of people who earn less than average earnings—can do it in such a way that the benefit can be concentrated without going right up through the system to give the further benefits to which I have just referred. Eleven pounds a week is not a bad bonus, even if one is earning £400 a week. My constituents—the workers who will receive only about £2 a week more—will feel a bit sick to think that the Budget that we are saying is good for the low-paid can have this effect on the highly-paid people.
I should like some sort of commitment to consider a root-and-branch change of the tax system, so that we can get rid of this crazy anomaly. It might enable my right hon. Friends to tackle some of the problems of the high marginal rates


which penalise certain people, though not everybody. But they will not be able to move on that as long as the present system exists. If they move on that and on the low-paid, the rich people will have two bites of the cherry. They will receive the benefit from dropping the high marginal rate and the benefit of the spin-off that works its way through the present system because it is so antiquated and out of touch with modern means.

Mr. Deputy Speaker (Mr. Oscar Murton): Order. I appeal to hon. Members for shorter speeches. Time is moving on.

8.19 p.m.

Mr. Malcolm Rifkind (): I agree with everything said by the hon. Member for Birmingham, Perry Barr (Mr. Rooker): what the income tax system needs is a root and branch change. It is becoming increasingly clear that that is the last thing we shall get from this Government.
The Chancellor's proposals presented to the House yesterday have been described as being his thirteenth Budget, which in the good old days might have implied a thirteen-year tenure of office. At least the British public can be grateful for the small mercy that they have been spared that trauma. Such is the Chancellor's capacity to promote inflation with all that he touches that he has been able to cram into his four years of office a degree of misery that would take any other Chancellor of the Exchequer those 13 years to achieve.
Yesterday, when he presented his proposals to the House the House and the public were once again told that the economy had turned the corner. Those of us in the House and throughout the country who have heard that expression many times before—that the economy has turned the corner and that we are about to enter the broad, sunlit uplands of economic prosperity—might be accused of treating that claim with a little scepticism. However, the Ministers on the Treasury Bench will be pleased to know that I have always been prepared to accept that claim when it has come from the Front Bench, whenever it is made. After all, if we turn the same corner often enough we tend to get back to where we started.
It has taken the Chancellor over four years to return to inflation roughly comparable with the 8·4 per cent. that he claimed in 1974. The nation will not forget, however, that between these two peaks of remarkable economic achievement the level of inflation topped 27 per cent., and that for the first time in modern history the British nation faced economic bankruptcy and national humiliation. Even now unemployment is still higher than at any time since the hungry thirties. The value of the pound is humiliatingly lower than it has ever been in our history and the productivity of British industry is less than during the three-day working week. That is an achievement of which no Government could be proud.
The Chancellor and other Ministers say that they have great faith in our economic recovery under their supervision. I suppose I would accept that if I used G. K. Chesterton's definition of faith as being the capacity to believe that which is demonstrably untrue.
One of the most interesting factors in the debate has been the contribution of the Liberal leader and, during the preparation of the Budget, of the Liberal Party. It is fascinating and sad to watch the Liberal Party's frantic attempts to prove its relevance on the contemporary British political scene. There is nothing more pathetic than the leader of the Liberal Party posturing as a latter-day Asquith, unless it is the hon. Member for Cornwall, North (Mr. Pardoe) posturing as a latter-day Lloyd George.
The Liberals have said that in general they are satisfied with the Budget, but that shows that they are easily satisfied. They wished to implement three changes. Two of them—the proposals for helping small businesses and for profit-sharing—welcome though they are, are of minuscule importance to the overall state of the economy. But the fundamental Liberal commitment, a commitment which is shared in many quarters, was for a radical change in the structure of taxation. The Government's response has been timid in the extreme. The Liberal Party has failed to make any impact on the Government and its irrelevance for the future is clear.
I wish to concentrate on the problems of income tax. The Government's real


failure has been in not contributing towards solving those problems. Their failure to make a contribution is all the more to be regretted since there are two fundamental reasons why this was the best time for many years for such a radical change to be made.
First, the nation has never been more united in demanding massive reductions in direct taxation, particularly income tax. Income tax has never been popular, but never has there been greater unanimity among the working public that it is too high. Equally, there has never been a time when the burden of direct taxation has been so great.
There has been comment on the Government's failure to reduce the top rates of tax. It is extraordinary that the only countries with higher rates than the United Kingdom are Algeria, Egypt and Tanzania, countries with which we are not normally compared in economic matters, but with which, if this Government are to remain in office for any length of time, comparisons would become increasingly desirable.
For many years taxation has divided the two major parties. For years the Conservative Party has argued that a high level of tax is undesirable and that if the choice arises it should be reduced, even if that means increasing indirect tax. For years the abour Party has argued to the contrary, believing sincerely that a policy of high taxation is desirable in the public interest, providing the best means of supporting and helping the vast majority of people. They argue that were we to reduce direct taxes significantly, only a privileged middle-class minority would benefit. The Labour Party believes, therefore, that direct taxes should be high and indirect taxes low.
A couple of fundamental changes in recent years make a nonsense of that distinction. Consider the total number of people who now pay income tax. At one time it was a middle-class tax paid only by those who were relatively prosperous. In 1939 there were 4 million taxpayers. By 1959 the number was 18 million, and today it is about 24 million. Unlike 20 or 30 years ago, it is paid by the vast majority of working people, irrespective of their economic background, their type of employment or their level of income. The Labour Pary has never

come to grips with this fundamental change.
The whole concept of higher rates of tax was once a perfectly legitimate method of redistributing wealth. Only those who were prosperous by conventional standards had to pay the higher rates. There are the very rich among us today who pay the higher rates, but the vast majority of those who pay these rates would not have been considered prosperous 30 years ago. The failure to index those rates to inflation has led to this problem in the last few years. The old theories that direct taxes were somehow progressive while indirect taxes were regressive might have been valid 30 years ago, but they are becoming increasingly absurd and irrelevant today. That is what makes so significant the Prime Minister's comments to the national executive committee of the Labour Party. He told the committee:
If you talk to people in the factories and clubs they all want to pay less tax. They are more interested in that than in the Government giving money away in other directions.
It is unfortunate that it has taken the Prime Minister and his Government so long to realise what the people they claim to represent really want. It is extraordinary that after four years of Labour Government no attempt should have been made to reduce the basic rate of income tax from 34 per cent. If the Chancellor had wanted he could have cut it by 5 per cent. That would have represented exactly the amount he has injected into the economy.
The Socialist appeal in this country and in many others has been based on the slogan that Socialists seek a fundamental and irreversible transfer of economic power in favour of working people. That is a fair representation of what the Socialists seek and what they believe in, and in a certain context I can give total and unqualified support to that objective of the transfer of economic power in favour of working people, because if we translate that into modern contemporary requirement it means first that we have to accept that "working people" is a phrase which encompasses a vast majority of the public, and the old doctrine of the working class is no longer relevant when those who live on inherited or investment income represent but a minute fraction of the total population. Therefore, if the Labour Party is now


prepared to accept, as a meaningful definition of the phrase "working people", that it includes the self-employed and employers and professional people as well as employees, we can agree on that.
Equally, there is certainly a need for a fundamental transfer of economic power, but no longer is it relevant to talk in terms of a fundamental transfer of economic power from one section of the population to another section; the transfer that is required today is a transfer from the State, the Government, back to the people of this country. It is the State, through Governments of all political complexions, which controls such a high proportion of our national income and our national wealth, and if it is transfer that we seek, it is transfer not from groups or classes of the population but from the State as a whole back to the population as a whole.
That is the policy that has to be followed, and it is because this Government have failed in this as in every Budget they have brought before the House in their four years in office that this Budget will be a great disappointment, not only to their committed political opponents but to a vast majority of the population.

8.30 p.m.

Mr. Michael McGuire (): In reply to the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) and some other speakers from the Opposition Benches, I would say that when the Prime Minister made the speech which the hon. Member has just quoted about tapping the wellspring in the country that wants a reduction in taxation, he was absolutely right, and this Government were right to do what they have done. My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) said that the hon. Member for Norfolk, North (Mr. Howell) was one of two hon. Members he instanced whose reputations had been destroyed or shattered today. I do not go along with that. Sometimes in this House we are too quick to impugn the motives and utterances of others wrongly. I am sorry that the hon. Member for Norfolk, North is not here. Having so many other commitments we tend to be disrespectful to one another and leave after we've made our speeches, and I am as guilty as any other. I am

not parading myself as a model in this respect.
Although the hon. Member for Norfolk, North is not present I would say that I do not attribute any ill motive to him, but he has made a reputation as a caring Member of the House in trying to analyse the interaction between people getting low pay at work and those who have to rely on State benefits, and he is right to do so. I draw a slightly different conclusion from that which he has highlighted. That is that the wages paid to many of our working people today are abysmally low, not that people who are on social security or drawing other State benefits are getting too much. Hon. Members, who are bound to have had experience of constituents who, through sheer misfortune in a majority of cases, have had to rely on State benefits, will know in their hearts that nobody is going to get rich on such benefits. A myth has been created that people would sooner be on State benefit than get work. That has not been my experience.
Only this week I had a most heartrending letter from a constituent telling me how many times he has tried to get a job and how his failure to do so has humiliated him. He is still seeking work. He is a man with two children, the kind of person who, according to the hon. Member for Norfolk, North—at least, if I understand what I believe he implied—is one of those better off on State benefit. Most of the unemployed people in this country deeply want to be employed. They do not want State benefit. Generally speaking people are on those benefits only because they cannot get off them. I am not saying that there are not some—a very small minority—who abuse those benefits. In any free society we shall get abuse from all sections of society. But a vast majority of those people, heaven help them, want to get off State benefit and to earn a living. They know they will be better off if that can be achieved.
The hon. Member for Norfolk, North, if I understand him correctly, implied that this was a choice that people welcomed and that they do not want to find work. I am probably one of the few, certainly in this Chamber now, who had to suffer humiliation when my mother was on what was then called "public


assistance". My hon. Friend the Member for Sheffield, Hillsborough (Mr. Flannery) indicates his agreement. Anybody who suffered that experience knows that it is burned into his soul.
The Tory Party is wrong in always trying to pretend that people generally like to be on social security benefits and that it is more desirable economically than working. That is a myth. I think that the hon. Member for Norfolk, North did himself a disservice.
The hon. Member for Perth and East Perthshire (Mr. Crawford), as we would expect, trotted out slogans about how the wicked English were battening upon the riches of Scotland to the detriment of Scottish people. I represent an area which has been proved in the House over the years to have been badly served in its share or allocation of the national cake. Certainly it has been very badly done by in the allocation of Government jobs as compared with those which have gone to Wales and Scotland. I am an ex-coal miner. I suggest that if we applied the hon. Gentleman's philosophy about the resources in one country being kept exclusively in that country, there would not be many coal pits in Scotland functioning. The hon. Gentleman should remember that. It is not a question of devolution, revolution or evolution. The choice will be made freely and fairly by the people of Scotland in a General Election. When they make that choice—and if they choose a separate Scottish Parliament—I think that they will come to their cake and milk and will find just how much they relied on the total wealth of Great Britain to help disadvantaged areas.
I felt that this was a novel Budget. I think that, in the words of the bingo caller who shouts out "Thirteen, lucky for some", it has been lucky and an improvement for many people.
I was particularly pleased to see the reference to law and order. If by that my right hon. Friend means more money to provide more policemen on the beat, I put up both hands. I think that is something like the wellspring of tax reduction for which the public is asking. Therefore, I welcome it.
However, I crib that my right hon. Friend, having money to dish out here and there, did not help a section of the public which I think urgently needs help.

I have mentioned these people before. I refer to parents who transport their children to school because those children do not qualify for free transport under the absurd regulation regarding two miles or three miles which determines whether free transport is to be made available.
I have had many deputations from parents in my constituency who will not allow their children to go to school unescorted. They make eight journeys a day to school, in the morning and back, before lunch and back, after lunch and back and again at the end of the afternoon. They face crushing financial burdens. They do not qualify for help. They will not allow their children to go to and from school unescorted—I do not blame them—and yet there is no relief for them. It would not require a large sum to help those people. I ask my right hon. Friend to note that the Government should make a start with the 11-year-olds and under. It would not cost much and it would be greatly welcomed.
I should have liked my right hon. Friend to level up the VAT rates. Many people—business men and others—will say that the absurdity of the 12 per cent. and 8 per cent. rates could have been resolved by a simple 10 per cent. rate. I think that most people would have welcomed it. I do not know whether the Exchequer would have lost.

Mr. Nigel Lawson (): It would have gained.

Mr. McGuire: If it would have gained, that is all the more reason for doing it. But if the loss would not be very much, I think that convenience should have pressed that upon my right hon. Friend.
I end on the question of the Chancellor's industrial strategy which ran like a thread through his speech. My right hon. Friend was at pains to emphasise that he did not want to do anything which would prejudice the success of our industrial strategy. He mentioned the finely balanced argument between having import control protection and free trade. We know that there is probably no other country in the world that depends as much on free trade as this country, but I think that we shall be driven to have selective protection for certain industries, some of them perhaps basic industries. The fact is that otherwise the bottom of our industrial base will collapse. It is


already being whittled away very greatly in many areas. There is 65 per cent. import penetration in textiles.
The other week I had an example of a company in my constituency, with a marvellous industrial relations record, facing problems caused by imports. I am told by the trade unions concerned that it has a very good safety record. It does not shirk spending money for safety appliances and making the work safer for its workers. It has a sick pay scheme and many other social benefits that we expect enlightened employers to provide. But it is faced with imports the cost of which is almost exceeded by its own raw material costs.
The answer is not a matter of modernisation to any great extent, although the company would do it if possible. When one is faced with that kind of cost and challenge, what can one do? When I questioned the company and we had a discussion about one or two matters, I found that it had to buy its steel from abroad. I asked "Why don't you buy it from the British Steel Corporation?". Whether we come from steel-making constituencies or other constituencies, we should take the company's answer on board. It said "The quality of the product from British Steel is too poor". It has to buy from overseas or it would go out of business. I am led to believe that the quality is too poor because British Steel has not modernised sufficiently in those mills where it makes what is called cold-rolled steel.

Mr. Bernard Conlan (): Mr. Bernard Conlan (Gateshead, East) rose—

Mr. McGuire: I shall give way to my hon. Friend in a moment. I want to finish what I am saying about this so that it will be absolutely clear.
I do not know how many people are importing that particular type of finished steel because the Corporation's product is of such poor quality that they cannot manufacture what they want to manufacture with it, with the result that they must buy abroad. The reason the steel is of a poor quality is that the Corporation does not have the modern machinery. I believe that it is incumbent on the Government to give it the modern machinery, otherwise, we shall go down and down. British steel production will go down and

down, because nobody will buy its products.

Mr. Conlan: Is my hon. Friend aware that if the remarks he has just made are reported generally it will imply that the whole range of steel products produced by British Steel is inferior? That is not so.

Mr. Hordern: The hon. Gentleman did not say that.

Mr. Conlan: The products of British Steel are of a very high quality. The Corporation may be lacking in certain specialised grades, and it is in those limited grades that manufacturers find they have to import. It is a very small proportion indeed.

Mr. McGuire: I was at pains to say—that is why I wanted to finish what I was saying before my hon. Friend intervened, though I understand the reasons for his intervention—that I did not know in how many grades that complaint was made. I assume and hope that it is in a very narrow range, as he indicates.
What I am saying is that if we have a nationalised steel industry and it does not have the modern equipment, the problem is not the will; it is not the fact that the workmen do not want to do the work or do not have the expertise. If they do not have the equipment, we should give it to them. It is as simple as that. That would help our economy and the company to which I have referred, which does not want to import.
However, I want to return to my main theme, that we shall have to look closely at the question of protection. It will not be a wall around all our inefficient or ill-deserving industries simply to keep them in business. That would be wrong and self-defeating. The company that I mentioned—I deliberately did not give its name—like so many others has not inflicted any of these ills upon itself. But there comes a time when some of our industries cannot compete with products coming in from poor-economy countries.
I know that there is an argument, and certainly among my hon. Friends, about whether we have to help some of the poorest countries to get on to the threshold of industrialisation. If that is so, all countries should assist those that want to get on the threshold as we have done by allowing 65 per cent. import penetration,


which will probably increase, in textiles. I do not know the figures for other industries, but we have gone a long way towards discharging our debt.
It will do no one any good if we say "We have to let other countries' products into our home market even if we cannot compete with them, even if the industries that are now complaining are suffering from ills that have not been self-inflicted."
Is it to be said that we have to let in these imports and let other countries come under the umbrella? If that is done, our industries will have no protection. To allow them to be imported in that way is foolish and damaging. It is a matter that we shall have to examine carefully. I urge my right hon. Friend the Chancellor and his colleagues not to dismiss the argument about selective import controls as being contrary to the good principle of free trade.
It is my right hon. Friend's thirteenth Budget and I look forward to his fourteenth. It will certainly be a Labour Budget on the next occasion. I do not think that there is any question about that. I understand the chagrin of the Tories. They think that we have pinched one or two of their clothes, but that is legitimate in politics. I believe that with all our other policies we shall be returned at the next General Election and that it will be a Labour Chancellor who will introduce the next Budget. That Chancellor is certain to be my right hon. Friend. I hope that in the next Budget he will help the group of people that I have been asking him to help and regret that he did not help in this Budget.

8.47 p.m.

Mr. Terence Higgins (): I believe that I have heard every one of the speeches today. They have been in marked contrast with the headlines that appeared in a number of newspapers both last night and today. There has not been very much enthusiasm for the Budget in the speeches that we have heard from either side of the House.
Many of the headlines referred to tax cuts. The Chancellor has made great play of his claim that he is cutting taxation. However, when we consider Table 6 in the Government's Red Book we find that the difference between the estimated outturn in 1977–78 for taxes on income compared

with the outturn that is estimated for 1978–79, there is an increase of about £3,000 million. The headlines led us to believe that there have been massive cuts in taxation and that combined with the indexation amendment that we passed last year the Chancellor has reduced the burden of tax on income. It is clear from the Red Book that that is not true.
Direct taxation and national insurance contributions have both been increased by massive amounts. That is worthy of comment at the outset. There is now no way in which the Chancellor can reduce tax levels before the General Election to those that existed when he came into office. The right hon. Gentleman constantly says that he would like to reduce taxation, but Socialist Chancellors are not genuinely in favour of doing so. It takes a Conservative Chancellor to make significant reductions in the burden of taxation.
The crucial question that we must ask ourselves is whether the Budget converts the substantial financial turnround that has been achieved into a real turnround with benefits for unemployment, real output and the standard of living. In my view that is not the effect of the Budget. There is reason to have real doubt whether the financial turnround that has taken place will be sustained.
The latest figures that are analysed in "Greenwell's Bulletin"—I do not always agree with it but the data are often extremely useful—suggest that the present rate of increase in the money supply is extremely worrying and not vastly different from that which existed in the period leading up to the February 1974 General Election.
I have explained previously why I think that such figures need to be qualified. However, the present figures are worrying. It may be that the Financial Secretary to the Treasury will feel able to comment upon them when he replies. They are extremely relevant to the point upon which I want to concentrate first, which arises from the Chief Secretary's remarks. I am glad to see that he has arrived back in his place. I was astonished by his remark about schizophrenia, because I think it is true to say that no Chancellor has ever introduced a Budget that has reduced taxation at the same time as making an announcement of an increase in the general level of interest


rates, as determined in this case by the minimum lending rate.
This is really quite extraordinary. It would seem that what the Government have in mind is to reduce taxation and then to cover the public sector borrowing requirement by borrowing from the non-bank public, which obviously would involve, I believe, an increase in interest rates. The Chief Secretary says that this 1 per cent. increase is purely for international considerations and so on. None the less, it is quite clear that there is an enormous deficit to be financed, and I believe that that will require an increase in interest rates.
At all events, even in the Chancellor's own Budget Statement there is this inconsistency. Clearly, if one has both cuts in taxation, on the one hand, which are designed to increase incentives and firms' efficiency, and, on the other hand, at the same time rising interest rates, that has quite the opposite effect. There are very good reasons why successive Governments have tried to pursue a policy that is consistent with regard to fiscal and monetary aspects of the economy, but clearly that is not so in this instance.
It was also interesting that in pursuing this argument the Chief Secretary was not prepared to say to what extent the £2½ billion cut in taxation was expected to be covered by borrowing from the non-bank public—that is, by borrowing which did not itself have an inflationary effect. My impression is that the Chancellor is sailing very close to the wind indeed in the changes that he has made, and he has no headroom at all if the estimate of the PSBR goes wrong. Given the extent to which his calculations last year were wrong, this gives very considerable cause for concern.
I should like to take up a point made by the hon. Member for Ince (Mr. McGuire) about import controls. It is absolutely vital that we should resist appeals from either the Tribune group or the Cambridge new school, so-called, for import controls. Any move of that kind on a significant scale would result in a protectionist war and, as the hon. Gentleman rightly pointed out, the effect of that on Britain would be far more serious than it would be on anyone else.
The other point about which I am worried in the international context is

that I believe that the effect of North Sea oil may tend to raise the exchange rate, and in his Budget the Chancellor has done nothing to offset that effect either by removing or by reducing exchange controls or to encourage significant flows across the exchange, which would ensure that the exchange rate remains at a level at which British industry can continue to be competitive, despite the present still very high level of inflation.
In that context, what needs to be said is that whatever may be done about the actual phasing of the debts by way of borrowing, on the one hand, and lending, on the other hand, it is still very important that there should be a significant move across the exchanges if the exchange rate policy is to be consistent.
I turn now to the question of industrial strategy. This is important, and if we are to avoid a situation in which an expansion of demand results in imports being sucked in and a corresponding effect on the overall international picture, it is very important that the Chancellor should have a strategy which encourages firms and individuals who are working in them.
I have grave reservations about two points in the Chancellor's speech upon which perhaps the Financial Secretary will comment. In his Budget Statement, the Chancellor made a new announcement about stock relief and suggested that the first two years of stock relief should effectively be written off but not the amounts which accrued subsequently, though these are clearly very large. He went on to suggest that some further arrangement might be made next year.
I think that the effect of this on many companies may well be rather horrifying, because hitherto it has been generally assumed, I think, that the stock relief deferred tax would not ultimately be collected, and although it clearly has an effect on the balance sheet and the firm's ability to raise finance and so on, that has been the underlying assumption on which perhaps both banks and firms have been operating. The Chancellor has now implied that the deferred tax may be collected, and large sums are involved. If he is not saying that I hope that the Financial Secretary will make it clear, or it could have a worrying effect.
The other thing contrary to justified industrial strategy is the lower rate of income tax. In a number of industries where work is difficult, particularly heavy industry, workers are inclined to stop working when they believe that they are beginning to pay tax. That is why it is important to raise the threshold, but that may still happen with a 25 per cent. band. The result will be a perpetuation of the situation where people will not work if they think that it is not worth their while.
In terms of the Red Book, the overall effect seems to be an increase in the level of demand not significantly different from that which the Government say is their estimate of productive potential. I am therefore not convinced that these measures will have a significant effect on unemployment next winter. That prospect remains dim. It is no good the Chief Secretary saying that unemployment has not risen as fast as might have been expected in view of the level of output. Many people are retained in jobs simply through the Government's measures, but those jobs are not likely to be viable in the long term. We must encourage firms to invest, introduce more capacity and employ more people in jobs with a future.
The Chief Secretary is unduly complacent about that, Industry's rate of return at the moment is very low. It has fallen dramatically over the years, and nothing in the Budget will encourage those with extra capacity to invest and create sustainable jobs.
It is remarkable how the figures have changed. Even five years ago, the suggestions for what the Chancellor should do ranged from raising taxes by £100 million to reducing them by £400 million. Now figures like £2 billion, £3 billion or £5 billion are bandied around. We have gone from millions to billions. The rate of inflation has been appalling, but it has not been that bad. We have gone from fine tuning, which has been, in some ways, legitimately criticised, to the changing of huge sums.
At the same time, there are very few actual incentives in the £2½ billion taxes of which the Chancellor proposes to relieve the taxpayer. The changes are wrongly structured as they relate to the lower rate, the threshold and the previous

standard rate and will not do much to increase incentives in British industry.
There is a certain staleness about the Chancellor's proposals. We did not even have his usual enthusiastic picture of things improving and all, by some miracle, being well next year. All we got was a series of proposals which are very dull and quite inadequate to deal with the fundamental problems of the economy.
The sooner the Chancellor is replaced by a Conservative Chancellor, whose heart is in the reduction of taxation, and who really believes in the profit motive and incentives, the better that will be. We only have to compare the record of the Government with that of the previous Conservative Government to realise what a lamentable failure the Chancellor's successive Budgets—all 13 of them—have been. This one is not as objectionable as some of the previous Budgets, but it does not do sufficient to set the record straight. That being so, the sooner we have a change of Government, and a Conservative Government who are really determined to get back to profits and incentives, the better.

9.0 p.m.

Mr. Nicholas Ridley (): My first and extremely pleasant duty is to congratulate my hon. Friend the Member for Ilford, North (Mr. Bendall) on a really remarkable maiden speech. He broke with the tradition of making a thoroughly controversial maiden speech and made a very non-controversial and short one. I am quite certain that the whole House will agree that that was pleasing to the House and that my hon. Friend's talents were clear from what we heard. I am sure that we all look forward to hearing him again.
I cannot say the same for the Budget as a whole. I had expected rather more, listening to the trailers. On Monday the Chancellor of the Exchequer said that he had some most agreeable proposals. After listening to the debate today, I think that that has rung a little hollow.
The Prime Minister went even further on Monday, and said that the Budget should be seen as a first step in the industrial West's collective action towards economic harmony. Judging by the attendance at this debate, hon. Members do not feel moved in that way.
These minor fiscal adjustments are wrongly interpreted as being a contribution to some major world economic plan. The Prime Minister is clearly trying to take attention away from the difficulties of the British economy by posturing as the saviour of the world economy, but the Budget did not justify his posturing.
The first matter that I should talk about is the Budget judgment. My hon. Friend the Member for Worthing (Mr. Higgins) felt, as I do, that a considerable amount of risk is involved in the strategy behind the Budget.
I turn first to the question of public expenditure. In terms of considering the judgment, I notice that in the Red Book an increase is predicted in paragraph 38 that is rather above that in the White Paper. I notice, also—several hon. Gentlemen have pointed this out—that the contingency reserve has already been more or less used up before the year even starts.
Then we have the strange feature that the nationalised industries are apparently lending the Government £29 million, whereas in fact they are being heavily financed by public dividend capital. I simply ask the question: where does this public dividend capital appear in the accounts? It is real money. The view that one gets in looking at public expenditure is that the 2·2 per cent. increase of the Chief Secretary has long ago been forgotten, that the 4 per cent. increase of his officials is probably now thoroughly conservative, and that there will be a much greater increase in public expenditure than we were led to believe.
The Chief Secretary turned on my right hon. and learned Friend the Shadow Chancellor and demanded to know where we would make cuts. I will give the Chief Secretary one answer to that. It is that subsidies lead
directly to mounting deficits financed by new and additional public expenditure on grants and loans which put other public sector priorities at risk; to indiscriminate subsidies from the taxpayer to the consumers; and in some cases to sharp reductions in investment and employment".
I am certain that the Chief Secretary would agree with these strictures on subsidies—or does he not agree? The Chief Secretary, apparently, is not answering

that question. Those strictures on subsidies come from page 22 of his Government's own White Paper, "The Nationalised Industries", Cmnd. 7131, which was published last week. If the Government think like that about subsidies, I do not see why the Conservative Opposition should not have the same view as well.
The tax reductions will bring the public sector borrowing requirement to £8½ billion. Already the money supply is edging above the guidelines for last year. The guidelines for this year are only 1 per cent. less, between 8 per cent. and 12 per cent. Most people feel that this is a moment when caution should have been shown. The Chancellor is clearly susceptible to this line of argument. In his Budget speech he went out of his way to warn us that for some extraordinary reason the month of May will show an increase in the money supply, which we must not take too seriously, but the whole of this optimism is belied by the fact that on the same day he had to increase the minimum lending rate by 1 per cent.
It is, indeed, an odd Budget which, to quote the Chief Secretary, "puts a stimulus into the economy" and at the same time takes it out again with an increase in lending rate. One can only call the Chancellor's Budget judgment an extremely risky strategy.
I turn to the tax proposals themselves. I suppose that I should first go into the subject of Liberal policy. I am glad to see the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) in the House. I am an ardent member of the Institute of Lib-Lab Relations and have paid my subscription. I should not really waste time on it. I have often been told that when shooting high pheasants it is a mistake to have a pot at a rabbit, but I cannot resist it in the light of the right hon. Gentleman's speech.
One should first start with the men and then go on to consider the measures. I have with me a list of the Liberal Shadow Cabinet. I notice the name of Lord Avebury, who is the spokesman on race relations. I thought that yesterday he made an extremely offensive remark about the immigration policy announced by my right hon. Friend the Member for Penrith and The Border (Mr. Whitelaw). Also included is Lord Mackie of


Benshie, who is Minister without Portfolio. There is the right hon. Member for Orkney and Shetland (Mr. Grimond), the Shadow Secretary of State for Energy, whose contributions on that subject are frequent and well known. But the thing that surprises me most about this body of important politicians is that this afternoon the hon. Member for Rochdale (Mr. Smith)—the Shadow Secretary of State for Employment—interrupted his Shadow Leader during his speech in order to extract from him a public pledge about what the Liberals would do when voting in Committee about certain income tax matters.
Never before have I seen a Shadow Secretary of State interrupt his Shadow Leader in public in order to demand a pledge, which, incidentally, was not even given to him. That makes new constitutional history, upon which I congratulate the Liberal Party.

Mr. David Steel: I am sorry to spoil the hon. Gentleman's constitutional point. In fact, neither my right hon. Friend the Member for Orkney and Shetland (Mr. Grimond) nor my hon. Friend the Member for Rochdale (Mr. Smith) is currently, or has been for some time, a member of the Shadow Administration.

Mr. Ridley: The right hon. Gentleman should issue a new list. He should get publicity for this astonishing change in responsibility and the dismissals that have taken place.
Having dealt with the men, or, rather, the right hon. Gentleman having dealt with the men, I turn to the measures. Here I have the Shadow Liberal Queen's Speech. I shall check on how we are getting on with the implementation of these proposals. It says that works councils should be set up by law with non-trade unionists having equal rights. I have not seen that Bill before the House. The Liberals also called for the extension of civil liberties by relaxing the Official Secrets Act, and that has not come forward. They called for rent derestriction of furnished houses, a national efficiency audit to reduce Civil Service bureaucracy, a reduction of unemployment, particularly among young people, and better consumer protection by strengthening the Monopolies Commission.
There is a lot of legislation still to come. At this rate we certainly will not

get up by August. Finally, the Liberals wanted Assemblies for Scotland and Wales with proportional representation and direct elections to the European Parliament also with proportional representation.
One can hardly say that much of the overall programme has been carried out. If one looks at the Liberal economic programme one sees that the Liberals wanted tax reforms and cuts involving £3 billion, less income tax, and new household allowances to help widows and other singles. This brings me to the Liberal Budget, about which we have heard so much.
A year ago I had occasion to refer to the Liberal Party as "mice joining a sinking ship", but I did not think that we would ever find the Shadow Liberal Chancellor grappling with the helmsman of the sinking ship and fighting as it sank. Although the Chief Secretary described this process as "a two-way teach-in" it is much more like the Cambridge boat race crew.
I take it from the Liberal Budget that
The raising of the employers' National Insurance contribution of 1½ per cent. is justifiable
The Liberals say that this will pay for the tax cuts
because in most other industrial countries business corporations pay more pay roll tax.
However, the hon. Member for Rochdale on 6th December, speaking on the Second Reading of the National Insurance Surcharge Bill, said
But there are many kinds of taxes which affect industry and which, in my view, have reached absorption point.
I think that he means saturation point. He went on:
The Government must understand that there is a limit to the amount of taxation which can be imposed on industry."—[Official Report, 6th December 1976; Vol. 922, c. 65.]
That must have been a unique occasion, because every Liberal voted against it. It never happened before. What is the cause of this change of view?
Then there is the question of the petrol tax and the direct and indirect tax switch. The Liberals voted against an increase in the petrol tax last year, although now they claim that the Government must make a massive switch to indirect taxation and that this is a step in the right


direction that could have been taken perfectly well. We have this strange ambivalence about the Liberal proposals.
More than anything that the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) can claim as a victory, whether on small businesses or profit sharing, has been the repudiation of his hon. Friend's Budget judgment. His hon. Friend wanted to cut income tax by £4·4 billion and increase indirect tax by £1·3 billion, leaving £3·1 billion increase to the borrowing requirement. I think that that is wildly high. The fact of the matter is that he has not achieved anything like that in his mutual teach-in with the Chief Secretary. The Chancellor has not put up indirect taxation at all.
The main economic desires of the Liberal Party, with which I have considerable sympathy, have simply not been conceded by the Government. The question for the right hon. Gentleman is whether he will lead his troops back down the hill or whether he will lead them up the hill this time. We want to know whether it is all huff and puff or whether he really means business. I think we all know the answer but we shall look with great interest at the vote on Monday night.
Returning to the Chancellor's Budget, I refer to the speech of the hon. Member for Perth and East Perthshire (Mr. Crawford), who it not here at present. Apparently he is the only advocate left of a switch from indirect taxation to direct taxation. He said that we could cut £150 million from duty on whisky and presumably put it on to the threshold of income tax, or something similar, to raise the money. That is something that we can all agree to disregard.
I come to the details of the increase in the tax threshold. It must be the mood of the House that the extent of the reliefs at the bottom end of the scale are very small indeed. I would not deride them because they are small, because small reliefs are better than none, but when we remember that in the past year pay rises have been held to 10 per cent. and inflation at about the same level, and that on top of that there have been massive increases in electricity and fuel charges, rates and many other forms of payment, which people cannot get out of paying, we see

that the increases in take-home pay are extremely small.
I do not believe that the poverty trap has in any way been conquered. My hon. Friend the Member for Norfolk, North (Mr. Howell) always plays an extremely valuable part in the discussion of these matters. He was much more right than were his critics this afternoon in the debate. There is no doubt that the poverty trap remains with us.
I believe that the reduced rate band was a mistake. I am certain that if the money involved had been spent in raising the thresholds—or raising them higher than they have been raised—it would have left many people not only out of tax altogether but out of the poverty trap. Many widows and single women between 60 and 65 are still paying tax on income that is solely composed of their State benefit. It cannot be right to pay people State benefit and then to have to take it away in tax because it is greater than what is considered to be the minimum level. This area has been one which the Government have conspicuously failed to sort out.
One verdict on four years of Socialism is that the disincentives to work and the taxation of those at the lowest end of the salary scale are an absolute disgrace. The situation should have been sorted out by now, and the Chancellor of the Exchequer has missed one more opportunity to do anything about the situation on this occasion.
I turn to the small business relief—a relief which is thoroughly welcome but which does not go anything like far enough. I believe that the only way of dealing with the threat of growing unemployment in the future is to have a much more active and successful policy of encouraging small businesses to grow. Perhaps the whole House would not agree, but certainly my hon Friends would identify capital transfer tax as one of the greatest inhibitions. It is quite possible to start a small business in any other country in the Common Market—even in the world, but it is very easy in the rest of the Common Market. In this country if one is successful and knows that capital transfer tax will take away a large slice of the reward, people will go away.
I welcome the roll-over provisions on capital gains tax, but why could not they


be made to apply to capital transfer, too? That would have been a real concession—something that might have made this country an attractive place for entrepreneurs from other European countries to start their businesses here, which is what we want to see.
I do not believe the Chancellor of the Duchy of Lancaster has done anything like enough. I remember on a film I saw the other day that one man said to another "My word, you have got bloodshot eyes". The other man replied "Yes, you ought to see them from my side." The Government should see this subject of small businesses from my side.
I remember Mr. Cyril Plant addressing a TUC conference in 1976 saying
With all the means at our disposal we must destroy the capacity to pursue self-employment.
Yet what have the Government done? The Prime Minister has made him a peer. A man with those views is thought fit for preferment in the Labour movement and to advocate views in Parliament that are totally contrary to what the Government are apparently seeking to do for small businesses. It is a Jekyll and Hyde situation—Dr. Lever and Mr. Plant.
Can we be told whether this conversion to the interests of small businesses is skin deep or genuine? If it is genuine, can the Chancellor of the Duchy of Lancaster be allowed to do a little more? I heard the Chancellor of the Duchy tell an all-party audience in the House that he agreed that capital transfer tax was disastrous for small businesses and that the rates were inhibiting. Perhaps there is still time for proposals to be put in the Finance Bill, but so far none has been put forward. It is time that the Chief Secretary remembered our Committee debates on capital transfer tax. He will probably remember debates on the Gilbert and Sullivan shop, and other such matters. He has not yet met the point, and he must do so if he wishes to encourage small businesses in this country.
The Chief Secretary has been at work in no uncertain way on tax evasion and avoidance. I must ask him a few questions about the section of the Budget speech which, no doubt, derives from him. We are told that
a level of secrecy which amounts almost to conspiracy to mislead".—[Official Report, 11th April 1978; Vol. 947, c. 1202.]

has been at work. May we please have details? What does this mean? Can we be told why no charges of conspiracy to mislead have been laid in the courts? Of course, this is just preparing a justification for the retrospective legislation that the Chancellor of the Exchequer has announced.
Retrospection was claimed by the hon. Member for Birmingham, Perry Barr (Mr. Rooker) to be justified because trying to dodge taxes was a moral offence. No one on the Opposition Benches will condone the schemes or vote against their being stopped, but that is a different matter from agreeing to retrospection. Let me quote the Chief Secretary a lesson on this subject:
It is time that tax-gatherers thought out more deeply and clearly their ethical approach to those aspects of human conduct which appear to offend them so much. Taxation has no more to do with morals than the Rating and Valuation Act, or the Community Land Act, or even the dog licence. Taxation is an act of Parliament not an act of God. It is what Parliament says it should be, no more and no less.
Not only has taxation no morals, it may not even claim to be fair. While we all have a public duty to comply with the law (including the speed limit?) this does not extend to complying with the 'spirit' of the law, still less with the supposed 'intentions of Parliament'. The law is what the Act says or, in case of doubt, what the Courts construe its words to mean.
Those wise words of Lord Houghton, writing about tax evasion in The Accountant, would be well taken by the Chief Secretary. Lord Houghton expressed the traditional view of the House. It does not seem justified for the Government at this stage, after the hundreds of years of the cowboys and Indians game between tax dodgers and the Inland Revenue, suddenly to claim that they had the right to bring in retrospective legislation.
I spent the weekend dreaming up the epitaph of the Chief Secretary for when, alas and unhappily, he is finally laid to rest. It may go something like this:
The bones of Barnett lie in this shrine.
He died in accordance with Schedule 9
Which states that life after 63
Is a way of evading CTT.
The progress of the economy has become rather like a range of mountains which diminishes into the sea and finally disappears. The tops get less high and the troughs become flatter. That is


because we seem to have no scope now between stimulation and inflation. Any amount of stimulus that may be given to the economy immediately alerts us, as my hon. Friend the Member for Worthing rightly pointed out, to the fear that inflation will return. No one believes that it will result in growth or extra employment.
In this Budget, as I have said, we have both stimulation and retardation. We have had both the £2½ billion in tax cuts and the 1 per cent. increase in MLR. So, in a way, the boom happened and went between half-past three and quarter to five yesterday afternoon. We are back in the trough again.
One has to put this in the context of the Government's record over the last four years: unemployment at a high level and rising; overseas borrowing, which, after the repayments, is still standing at about £13 billion which the Government have borrowed and did not even have a triple-A certificate when they borrowed that lot; inflation; the value of the currency just about halved; the standard of living down 6 per cent.; production stagnant and no growth since 1973. It is clear that it is a vain policy to think that somehow, by injecting small amounts of tax cuts and by reducing people's marginal tax by £1, £2 or £3 a week, this will suddenly transform the situation and be the panacea on the fiscal side which will put it all right.
There is one glaring omission. The help for the managers, the entrepreneurs, who are responsible for creating jobs and wealth, is not forthcoming.
The best form of tax avoidance—the form which has been practised more than any other in this country—is simply to go away. That is the best way to avoid the Chancellor's taxes. We do not live in a closed world now, when people cannot travel. The Government, with their obstinate attitude towards higher rate taxation, have driven away the skilled managers, the professional men, the technical experts and, above all, the entrepreneurs who might have given them the jobs that they need and the gross domestic product that they could then tax to pay for their public expenditure.
I want to make only one quick quote. Today I saw the chairman of the National Coal Board. He told me that the manager of a colliery in the Ruhr

would have 88,000 deutschemarks after tax. Converted into English money at the current rate of exchange, and as there is a 31 per cent. increase in the cost of living in Germany compared with this country, the equivalent net income of that colliery manager after tax is £17,480. Sir Derek Ezra's salary, which is public—so I do not think that he will mind me quoting it—on the relevant scale, after tax, is just under £11,000 take-home pay. How can a colliery manager, who is fairly junior in the managerial train, get £17,480 when the chairman of the National Coal Board gets £11,000?
We have, therefore, this one obstinate problem with which the Government will not deal, which is that their egalitarian doctrines still stand in the way of the growth of the British economy. There can be no doubt of the main reason for the British economy's not growing. It is that the Government hold the obsessive view that all money belongs to them and that they dish it out to the people they like to dish it out to.
We believe that all money belongs to those who earn it, and that they pay what is necessary to the State. Until the Labour Party begins to understand that not only is egalitarianism a view not shared by the people of this country, but that it is a fatal view which causes production to dwindle and clever, skilful and hard working people to leave the country, there is no hope that the Government can fulfil any of their economic plans. They would do far better to resign.

9.32 p.m.

The Financial Secretary to the Treasury (Mr. Robert Sheldon): My first task this evening is to pay tribute to the maiden speech of the hon. Member for Ilford, North (Mr. Bendall). It was a refreshingly novel type of speech for these days. The convention that maiden speeches should be non-controversial is being swept aside and we hear very few non-controversial maiden speeches. The hon. Member's speech showed the value of sticking to the conventions of the House, not only in that it got the hearing that all maiden speeches deserve and require, but also in the understanding it gave us of the person and of the work that he sets out to do in this House. His particularly kind and generous tribute to Mrs. Millie Miller was exceptionally welcome. It enables us to say with complete certainty


that we shall indeed listen very carefully when the hon. Gentleman makes his next speech.
We have had an interesting second day's debate on the Budget. One of the tasks facing Treasury Ministers and their colleagues is to try to learn something about the policies of the Opposition. One of the difficulties is to work out their aims and how their policies are being formed. It is a form of Kremlinology since we try to determine, on the basis of who is making the statement, whether it is likely to find its way into the Tory manifesto or that party's subsequent programme.
Clues about Tory plans and intentions are subject to close examination according to who is in which position and who makes which statements. We indulge in this examination game on matters such as public expenditure, policy towards the Bank of England, and so on. But we have had two important clues today and over the past two days on some particularly important matters. The first is the tax credits system. In "The Right Approach" the Conservatives indicated that they believed in such a system. In "The Right Approach to the Economy" no reference is found to it. Thus, between the introduction of "The Right Approach" and that of "The Right Approach to the Economy", clearly there had either been some change of mind or some reordering of priorities.
We are very interested in a policy that would cost about £6 billion and was to have brought in a new and great scheme to end all the nonsenses, so the Tories told us, and we are interested in how it was to be developed. We know that the right hon. Member for Wanstead and Woodford (Mr. Jenkin) has been telling us about the delights of this scheme, but we also know that he does not happen to sit very near the right hon. Lady the Leader of the Opposition, either at Question Time or at other times and that today the hon. Lady the Member for Wallasey (Mrs. Chalker) replied to the statement made by my right hon. Friend the Secretary of State for Social Services.
We understand all these matters, but the nearest we have had to a definition came in yesterday's reply by the Leader of the Opposition. Referring to the reduced rate band, she said

One of the effects of bringing it back is that we could never, in fact, have a tax credit system. [Interruption.]"—[Official Report, 11th April 1978; Vol. 947, c. 1212.]
I am particularly sorry about that interruption, because obviously the hon. Lady did not complete the sentence which—although we cannot say it with certainty, even at this stage—probably would have laid to rest the £6 billion tax credit scheme that was inadvisedly brought to light.
I should be delighted if we could have a definitive statement whether this £6 billion scheme has finally collapsed. It is an important matter to an Opposition party that states its concern with public expenditure. If the Conservative Party has finally demolished the £6 billion scheme, the least that ought to be done is for the party to announce it so that we could look for its replacement somewhere else. It seems a pity that a matter as important as this has not been more fully dealt with by the Opposition.
The other matter at which we have looked with some care to see the changing shape of Opposition policies concerns the investment income surcharge. This was brought in by the then Mr. Tony Barber. Although from time to time we have heard disapproving noises about the investment income surcharge in meetings of the Finance Bill Committee, it was not mentioned in "The Right Approach". There again the Opposition seems to have changed their mind on some of these matters. Subsequently it was said in "The Approach to the Economy", at page 31:
We are increasingly doubtful about the wisdom of retaining any kind of Investment Income Surcharge; in truth, it is a tax on savings.
That is where it was last week when we heard a Ten-Minute Rule Bill speech on 5th April. The hon. Member for Norfolk. South (Mr. MacGregor) then urged in that Bill the abolition of the investment income surcharge. The hon. Gentleman is a Whip. There was a previous occasion when the hon. Member for Blaby (Mr. Lawson) was a Whip. In both cases their roles were not clear to us from this side of the House because they seemed to have a certain amount of freedom and yet, of course, they are part of the official Opposition team. On previous occasions on such subjects as the


Bank of England, when this former Tory Whip came to the Front Bench, as he did eventually, we heard the same arguments put forward from the Dispatch Box. Perhaps we may be hearing a scheme to end the investment income surcharge from the Dispatch Box soon.
At present the Opposition seem to be in some form of no-man's land and it is difficult for us to know what their position is on an important matter such as this. Governments of all kinds have held that there is a distinction between the moneys earned by one's toil and the moneys that come from capital invested.
The amount of money that comes from the investment income surcharge, £300 million, is such as to prompt one to inquire whether the position of the Tory Party has now settled down so that it is able to make a definitive statement of where it stands on the matter. The Tory Party seems to be undertaking a review of many of our economic, financial and taxation measures. There is nothing wrong in that, but I must ask the Tory Party to let us know where it stands on those matters so that we can find out what we have to attack and what we have to examine.
If this country were unlucky enough to wait for this information in the first Conservative Budget—the Tory Party not having given the electors a chance to see the kind of measures it would introduce—it would have no basis on which to claim the assistance of the majority that might willingly have been given.

Mr. Tapsell: Is the right hon. Gentleman seeking to debate the Labour Government's last Budget or the Conservative Party's first Budget?

Mr. Sheldon: I am trying to find out from which standpoint the Conservative Party is criticising this Budget. When it makes a statement on what it likes and what it does not like, it is difficult to know its coherent basis, if it has one.
The right hon. and learned Member for Surrey, East (Sir G. Howe), whom I do not see in his place, mentioned that he wanted to see the basic rate reduced to 30 per cent. and below. A basic rate of 30 per cent. and below would cost about £2,400 million, at a rough reckoning. If the Conservative Party were to bring the top rate down to 60 per cent.—

the right hon. and learned Gentleman said that he would prefer to reduce it further than that—this would cost, depending on how the bands were placed, about £400 million to £500 million.
We shall see where the Conservative Party stands on investment income surcharge during further debates and in amendments which Conservative Members may seek to table to the Finance Bill. We see that they are talking about a reduction in tax of at least £3 billion. Those are substantial sums. The question that has to be asked straight away is how the reduction is to be phased and how the Conservative Party would pay for it.
We know how the Liberals would pay for the reductions that they are seeking. They would pay for them in indirect tax increases. But the Conservatives have made no such statement. They have simply come to the House and given their views about very substantial sums of money without giving any indication how they would do what they propose.
I know that the Conservatives can say that they have done this sort of thing before. I know that they can point to the fact that they once had a Chancellor of the Exchequer, Tony Barber, who was able to come in on a considerable balance of payments surplus and blow it all away by that sort of policy and by the subsequent printing of money. Anybody who seeks to do it again is likely to find even greater problems when he tries to implement it.
There are those who suggest that these enormous tax cuts without any offsetting indirect tax increases would lead to an improvement in confidence which would encourage investment. I very much doubt whether it would do anything of the sort. A policy of moderate changes taking place year by year, as the economy permits it, is right and proper. But the substantial changes proposed could lead to a decline in confidence, to problems of gross inflation and of imports coming in to meet enormous demand that could not be met by our own productive industry.
Some of the problems of the motor car industry stem from the time when that flood of money was let loose, well in excess of what the industry could cope with. One of the hardest tasks of anybody importing motor cars is to set up the servicing and spare parts industry. People were able to do that on the crest of a


boom engendered by the printing of money. We are still suffering from the damage that it did to a number of other industries, too.
Among the other things done then were the three major tax changes introduced by Mr. Barber, as he then was. The first was the introduction of the unified tax system, which my right hon. Friend the Chief Secretary and I strongly welcomed and had advocated for some time. The second was the introduction of the imputation tax system, which I strongly rejected at the time and still feel sorry about. But, unlike the Opposition, we feel a responsibility to retain some form of continuity, so that industry can understand the basis on which its profits are being taxed. Therefore, although we opposed that system, we still retain it. The third change was the value-added tax, which we kept for the same reason, but I think that it was right after a reasonable interval to have the kind of review that we have just completed.
Perhaps I may say something about the review. In the Standing Committee on last year's Finance Bill, I undertook to ask Customs and Excise to invite interested bodies to give their views on a number of specific areas—in particular, bad debt relief and annual accounting—and on VAT generally. I thought that after four years' experience of the working of VAT it was right that the operation of the tax should be looked at closely to see what could be done to simplify and improve it.
As a result, a number of representations have been received and there have been useful discussions with a number of trade and professional bodies. What we have had in mind is the need to simplify the administration of the tax, particularly its effect on small firms. I am pleased to tell the House that in a number of ways we have been able to do this. We announced yesterday some proposed changes, and I would like now to give some more detail about these changes and the reasons for them.
My right hon. Friend the Chancellor mentioned in his Budget speech that the registration threshold was being increased from £7,500 to £10,000. This is the maximum practicable increase possible under the EEC sixth directive on VAT. The new limit will apply to any business whose effective date of registration falls

on or after today, 12th April. This means that where a business exceeds the old turnover limits for the first time for the quarter or quarters ending 31st March it will not be required to register if the turnover is below the new limit. A corresponding increase in the threshold for de-registration is also being made. This will be raised from £6,000 to £8,500, but for practical reasons this cannot come into effect until 1st July. It is estimated that these changes will enable up to 90,000 businesses which normally make net payments of VAT to cancel their VAT registration if they wish.
We also propose to make important changes in the rules on partial exemption under VAT. At present about 20,000 traders who are partly exempt have to apportion their input tax according to the ratio of their chargeable business to their exempt business. This involves them in complicated book-keeping transactions. We are maintaining the present 5 per cent. de minimis rules, which many traders have told us are of substantial benefit. This will allow many more businesses to ignore their exempt outputs for this purpose.
On this basis, the number of traders suffering some reduction in their input tax will be reduced from 20,000 to about 3,000. This change will particularly help smaller traders. It will also provide the opportunity to bring in a very much simplified VAT return form, which will benefit all the 1¼ million traders who are registered for VAT. The present form contains 26 boxes for figures covering two pages. The new form will require fewer than half these figures and will use only one page. The new form will be introduced in the autumn.
There are two smaller changes. We are proposing to encourage smaller businesses to modify their normal record keeping procedures so that they can, if they wish, use their cash books as their record of purchases for input tax purposes. That will save them the trouble of keeping a separate account of purchase invoices. The other small change concerns the limit below which retailers are able to issue less detailed tax invoices. The limit for individual supplies will be raised from £10 to £25.
There are two other matters that have been the subject of greater argument. During the passage of the Finance Bill


last year the Committee considered suggestions for introducing some form of annual accounting for VAT. That was one of the recommendations made by a Conservative task force. Customs and Excise has been studying the suggestions and has discussed them with relevant trade and professional bodies. In general those bodies have shown a marked lack of enthusiasm for the proposal. The consensus has been that annual accounting would make it more difficult for small firms to keep their records up to date and would complicate rather than simplify the administration of the tax. That view was supported in representations that Customs and Excise received from the CBI, the National Chamber of Trade and the Retail Consortium. Against that background we are persuaded that it would not be right to introduce annual accounting.
A suggestion was made that businesses, especially smaller ones, would find it easier if VAT return periods covered the same period as their own financial year for their accounts. That arrangement is already normally permitted where businesses do not have a financial year ending at or near the end of March or December. There is a need to even out the flow of returns made to Customs and Excise, but in order to help smaller firms it is now proposed that any firm with an annual turnover of up to £50,000 may opt to choose its VAT periods to fit in with its own financial year.
The other topic that has been the subject of controversy for some time is whether a major simplification of the tax could be achieved by eliminating VAT on transactions between registered businesses. That proposal seems to be inspired partly by comparison with the machinery of purchase tax where sales between registered traders were relieved of tax, and partly because VAT has the same economic effect as a retail stage tax. On that basis some argue that it is not worth collecting it at the earlier stages only to pay it back to the registered purchaser. As with the suggestion about annual accounting, there is some obvious immediate attraction about these proposals, but there are a number of great difficulties, especially those of control,

as the retail stage is not so easy to recognise as many might suppose.
Many businesses make extensive supplies to both trade customers and final consumers, and experience throughout the world has shown the difficulty of collecting retail stage taxes at other than comparatively low levels. Finally, any simplification measure would have to be accepted by the EEC and all the other member States as consistent with our Community obligations. Nevertheless, we shall consider carefully the representations that have recently been made.
I mention one or two other matters on the administration of VAT before I come to relief for bad debts. The administration of VAT in the early days of the tax was the subject of some criticism. A great deal of that criticism was unjustified, but the review provided the opportunity to examine a number of aspects concerning the control of the tax.
I have been concerned that a fresh look should be taken at the training programme for VAT staff and at the operation of the tax as regards removal of books and documents from traders' premises. That is a matter that causes a great deal of unnecessary concern and misunderstanding, especially among smaller traders. Customs and Excise has examined its training programme for new entrants who will be working on VAT control visits. It will be introducing a fundamentally revised programme that takes account of the experience gained since the introduction of the tax.
It has also revised its instructions not only to make it absolutely clear that books should not be removed from premises, except where it is absolutely essential, but even then, except in fraud cases, only with the agreement of the trader concerned. It is also placing emphasis on the need to make sure that the books are returned as quickly as possible.
Customs and Excise has also been having discussions with the construction industry to simplify the administration of the tax. This is a complex area, but I hope that something useful will emerge.
We are also looking at the possibility of action concerning the VAT position of transactions in land. This is another complex area of the law, but we are exploring this matter and are having discussions on this as well.
Finally I should like to say something about my right hon. Friend's announcement concerning relief for bad debts. This has been the subject which has aroused the greatest interest in the review. In considering any relief, we have had to bear in mind that by the time a debt becomes bad, the debtor, if he is already registered for VAT, will normally have already taken credit in his own tax account for the VAT element, and any relief which is granted to the creditor may therefore result in the Exchequer refunding tax which has already been effectively repaid to the debtor, and this would involve a considerable loss of revenue.
There are problems of controlling a relief scheme to make sure that there is genuine entitlement to the amounts claimed, and there are also the costs to businesses in administering such a scheme. These have all to be taken into account. But, unfortunately, relief for bad debts cannot be regarded as a measure of simplification in the administration of the tax. I recognise strongly that there is a good deal of feeling that something must be done. This was particularly evident during our Committee stage debates on last year's Finance Bill.
We have, therefore, looked for a scheme that will be simple to operate for traders and Customs alike, and we have decided to accept the point put in the debates last year when we were urged to recognise the hardship arising when a trader incurs a loss of tax on a bad debt, even when he has pursued his customer to the full extent available under the law and his customer has gone into insolvency. In such circumstances, it was pressed on us, there is then greater certainty about the debt, and generally speaking there is a third party, often the official receiver, who is administering affairs. So the scope for abuse is small as compared with other debts. It is also a fact that the average non-preferential creditor in an insolvency recovers only 2 per cent. or so of his debt.
Perhaps finally I could say something about tobacco duty and the surcharge

that has been imposed upon it for health reasons. Although the derogation refers only to cigarettes, we are, of course, free to propose a corresponding increase in other tobacco products. Hand-rolled cigarettes may yield as much tar as any manufactured cigarettes, but it not possible to determine tar yields for hand-rolling tobaccos, as much depends upon the method of making the cigarette. We have, therefore, decided that health arguments do not require an immediate duty increase to discourage such tobacco. We shall however, watch the situation and we shall be prepared to take action if there is substantial switching from manufactured cigarettes to hand-rolling tobacco as a result of the surcharge.
It is nearly 10 years since I and one of my hon. Friends went to visit the then Financial Secretary, the present Chancellor of the Duchy of Lancaster, to urge him to impose a differential surcharge on cigarettes. It is with some pride, at any rate, that I find myself in the position of bringing forward some of the detailed measures concerning this particular health surcharge. We got the derogation. I think that it will be valuable, and it will certainly be very much a matter for investigation and examination by other countries which are interested in what we are doing here.
I believe that this Budget, which seeks to remove some of the harshness of the economic measures that we have had to accept in recent years, has been generally welcomed. What we have seen over the past few years, as a result of sharing the burdens, is that we have come out of this period united as a people with a social strength as well as a social cohesiveness. What we now need to do is to convert these advantages to their economic and industrial equivalents. I believe that this Budget will be the means of providing the prospects of bringing this—

It being Ten o'clock, the debate stood adjourned.

Debate to be resumed tomorrow.

Orders of the Day — RURAL AREAS (SERVICES)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Tinn.]

10.0 p.m.

Mr. John Ellis (): I am glad of the opportunity to raise the subject of declining services in rural areas. Particularly since the war, because of the change to a more efficient agriculture, the number of people living in rural areas has declined and many of those who remain have bought cars—people who never had them before. The decline in the rural area has had a great effect. It has meant that bus and other transport services, many of which were on the brink of viability, have become uneconomic. Services have been cut and the price paid for them has increased. Those on low incomes—common in rural areas—as well as pensioners have been particularly hard-hit.
Successive Ministers of Transport, especially the present Secretary of State, have sought to counterbalance this trend with transport subsidies to shire counties like Humberside, through the rate support grant. However, we have then seen the unfortunate spectacle of that money not being spent in the way intended.
This has happened so much that the Secretary of State recently announced that in deciding whether to give further transport supplementary grants he would review the performances of the shire counties. My own county of Humberside has been singularly lacking in this respect.
It is particularly grievous when councils claim at election time that they will cut the rates but do not dwell on the consequent cuts in services. This has happened in my area, where services have been cut tremendously. It is galling for a Labour Government who have a different policy that money intended for specific purposes should be used to keep down the rates.
The diminution of bus services means that when people have to take work in larger towns they often have many travelling difficulties.
Rural areas traditionally have Tory authorities, which are not lavish with

concessionary fares. This is true in my area. Scunthorpe gives more concessionary fares than the neighbouring rural areas. This shows the different policies of the two major parties. But concessionary fares are no consolation if there is no bus service at all.
As I said, the traditional populations of villages have declined, and although some people have moved in, they have often had cars.
There has also been a change in shopping habits, with the introduction of supermarkets, and so on. The closure of village shops and sub-post offices is happening not only in my constituency but throughout the country, for the reasons that I have stated.
The Post Office was very good in giving me the details. Between 1st October 1976 and 30th September 1977 there were 186 closures by the Post Office after vacancy reviews. Of these, 81 were in towns and 145 were rural sub-offices. Eighty were closed because no one applied or because the applicant was not suitable. Of these, 11 were in towns and 69 in country areas.
Here we have a new policy—for reasons, I take it, of economy. When a person gives up a sub-post office because of retirement or for any other reason, the Post Office holds a review. I understand that its present policy in rural areas is that if there is another sub-post office within two miles, it is not likely to carry on with the sub-post office concerned.
There is also the problem that in many cases there are no takers when somebody gives up a sub-post office. I gather that this happens in the majority of cases. I had a difficult case in my constituency, where the person retiring advertised and found someone to buy the business. The Post Office's method is to advertise and to take the best of the suitable applicants. In this case, the Post Office did not select the one to whom the retiring person wished to sell. The result is that someone who has given a great deal of service is now in a difficult position in trying to get rid of the business.
There are also the cases where the Post Office authorities, for policy reasons, decide no longer to have a sub-post office in a particular area, as a result of a


review. There are real human factors involved. The Post Office ought to consider these cases where people have given dedicated and selfless service over the years.
I disagree with the figures that the Post Office has given me for my own constituency, and I have looked back through my files. Indeed, problems of this sort led me to the conclusion that I should seek to raise the subject for debate. I find that since 1974 the following sub-post offices have shut in my constituency alone: Roxby, Flixborough, East Butter-wick, Appleby, Saxby-All-Saints and Horkstow.
In most cases there were no applications when a sub-post office was given up. When the sub-post office at Saxby-All-Saints was given up there was no one willing to take it at the time, but since then someone has been found who is willing to take it on. But now the Post Office will not agree to it, on the policy that the people can get to another village where there is a post office. But, because of bus fares going up and the infrequency of the services, old-age pensioners either find it inconvenient or they have to spend a lot of money out of their pensions in order to get to another village and back.
I know that there are sometimes alternative arrangements, but old people are proud. They live in closely knit communities in country areas and do not always want neighbours to collect their pensions for them or to know about their business.
There are other policies which are affecting rural areas. There is the sort of policy that is a result of the tidy mind and the economy of scale. Increasingly the attitude is one of looking at the development pattern and deciding that one village can develop while another must stay as it is. There are, therefore, other agencies which are concerned in these matters. Sometimes it is a matter of fitting in a new sewerage scheme, for example, and the authorities are loth to make the necessary changes because, on the development plan, the village is not one in which it is planned to build or expand.
There have been cases where, because of the drift of population, and changes in this respect, schools have closed. In

some areas small hospitals have closed. This has all been done on the basis of economy of scale.
I can think of a dramatic way in which this has been brought to my attention. People in one of my villages, I think it is Broughton, are complaining because the village is not as clean and tidy as it used to be. Someone in the county council with a tidy mind has dreamt up a scheme and said "This is the modern age. We must now make use of all the hedge cutting machinery that we possess". Instead of having a village lengthman who looks after one or two villages, we now have mobile gangs. From time to time—perhaps three times a year—a gang descends on the village with hedge-cutting machinery and grass mowers and litters the place with grass cuttings. It then departs, never to be seen again.
In the old days the village lengthman often played an integral part in the life of the community. He knew that autumn does not happen at the same time every year. When the leaves fell he knew which drains he had to unblock. When the snow came he knew where he was in difficulties. If there were any difficulties in the village—some mishap, or something that needed to be attended to—he was the man who was the key link with the county council. He is no longer. In a way, that demonstrates how the economy of scale—the idea that one can tidy everything up by big units—completely misses the point, particularly in rural areas.
I want to say another word about my own area. Transport is often the key to these problems. At present the Humber bridge is being built. It is not due to open until next year. I am very critical of Sealink, because it was supposed to have a great deal of debate and public discussion before any decisions were taken. I would have thought there was a case that should be examined on the question whether we still ought to have a passenger service in addition to the bridge. This is a developing area on my side of the river.

Mr. Kevin McNamara (): Both sides of the river.

Mr. Ellis: I notice that my hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara) has joined me. Perhaps there will be job opportunities


on my side of the river of which his constituents will want to take advantage. I believe that there is a case for having something like a hover service, which may not need the quays and the facilities which at present exist. But beyond this, I notice that someone has had the bright idea of running an express bus from Grimsby. It is easy to say that, but the rural network of buses often winds between particular villages. If one goes directly one may go through two of the bigger villages, but in that way we ruin the bus service or create consternation about what is a delicately balanced operation.
Similarly, in my village—New Holland, where the ferry starts—we shall have to look at the transport needs in the light of the new situation. I expect the county council to be initiating a debate on what ought to happen in the new circumstances. Organisations such as Sealink should desist from making any statement.
It appears to me that what Sealink has decided—I know that its big operations are cross-Channel—is that this is a little ferry which it wants to get rid of at the first available opportunity in order to get its hands on the compensation that will come with the building of the Humber bridge. It has run the service into the ground through lack of maintenance. There used to be three ferries, one acting as back-up.
Sealink took one boat away and ran the other two boats as hard as it could. The "Lincoln Castle" now needs extensive repairs, and we are left with a one-boat service. I have written to my hon. Friend about this matter, but I would say to him that this is not good enough and I hope that he will use some muscle on British Railways in order to change the situation.

Mr. McNamara: My hon. Friend who will reply to the debate should bear in mind that this is not just a south bank issue. In fact, on the north bank a great number of people use this ferry service. The fact that we now have only one ferry being worked into the ground—I am not sure whether that phrase is apt at the moment—can create a great deal of disturbance, not only on the south bank but

to a great number of people on the north bank who go to the south bank seeking employment.

Mr. Ellis: I am grateful to my hon. Friend. He adds to the point that I have already made.
I should like to offer one suggestion which I think could help. I do not want to set up a big bureaucracy, but perhaps someone at county council or district council level could look at all the problems that we are facing in the rural areas. For example, I know that the county council in my area is cutting services as fast as it can. But where there is a service, such as a mobile library, there is no reason why we cannot consider the possibility of an official giving out pensions off the same bus as it goes around or perhaps collecting prescriptions so that they may be dispensed. This is an easy suggestion, and it is possible that it would not work, but I think that we should have somebody looking at the combined social services and the problems that exist in specific areas.
I was pleased to see that we had a most important debate on this matter at the last Labour Party conference and that the national executive set up working parties to consider this kind of problem. I wish them every success.
It is said that we on the Government side of the House have no interest in rural areas. That is not so. I know that the present Government are looking at many of these issues, and quite frankly we are not being helped by some of the shire counties. I hope that they will reform their ways and that they will make available and use money given by the Government and that we, for our part, will do a great deal of research. This may encourage other people to look at the manifest problems caused by the changing life style and pattern in our rural areas, and do something for these people who, in this modern day and age, find themselves faced with diminishing services.
I hope that the Minister will draw the attention of the Post Office to the question of post offices in village stores, which is very serious in many areas. This problem is gaining momentum and manifesting itself in rural areas in my constituency and elsewhere.

10.17 p.m.

The Under-Secretary of State for Transport (Mr. John Horam): I am delighted that my hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis) has succeeded in bringing this subject to the attention of the House. The question of declining services in rural areas is very important. The Government fully recognise the importance of the range of problems upon which he has touched, albeit briefly, this evening.
In addition my hon. Friend will be aware that the Labour Party, following the conference at the end of last year, has set up a national executive committee working party on the problems of rural areas. My hon. Friend serves on the Standing Committee on the Transport Bill which reached its 20th sitting yesterday and therefore he as much as anyone in the House is playing a part in bringing hope to those who face this problem of declining services in rural areas.
I welcome the opportunity to mention Humberside in particular and I was glad to hear the contribution of my hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara), who is a member of that shire county where the problems are especially acute.
In the time available I shall concentrate on transport, although the problems of rural transport are typical of many other services in country areas such as welfare, housing, schools, post offices and other aspects which my hon. Friend developed.
Certainly, we all know the hardship particularly for older people and poorer people who live in rural areas. The Government have taken positive steps to help local authorities to do more for such people. In transport the White Paper marked a major shift of emphasis to the country areas with a package of measures designed to meet the needs of people living there.
We have provided the finance by an increase of £15 million in the annual provision for revenue support for bus services in country areas. This is more than half as much again as counties are spending on rural services now, and it is enough to maintain the present network at broadly its present size without the need for fares increases much above the rate of inflation.
Only by maintaining adequate public transport in country areas can we help those who depend on buses to get to work to do their shopping or for social journeys. Without proper transport these people, particularly the lame or the poor, are cut off from the opportunities open to those who live in the major conurbations where journeys are shorter and public transport more readily available.
In addition, the Transport Bill requires shire counties to prepare and publish public transport plans and to enter into three-year agreements with operators to underwrite essential bus services. I know that my hon. Friend knows all about this, because he has played his part on the Standing Committee of that Bill to bring this compassionate idea into operation.
These plans will be prepared in consultation with transport operators, district councils, trade unions, transport users and others concerned with public transport. County councils are already in a position to assess needs and provide the resources for necessary services which cannot pay their way. Preparation and publication of plans will underline the importance of public transport and will make it easier for people to know what are the county council's policies and plans for maintaining the public services.
Our Transport Bill also contains provisions for community buses and social car schemes which would help in this connection. Their development will continue to be controlled by the traffic commissioners who will see that new schemes complement and do not damage the existing network of services. Our programme of 16 rural transport experiments is also examining other new forms of transport, such as post buses and shared hire car schemes. The programme is now well under way with nine of the experiments started and with three more planned to start by the end of the month. The experiments will provide the basis for valuable do-it-yourself guidance to local communities which we hope to publish later this year.
My hon. Friend also mentioned the problems faced by pensioners. Pensioners in country areas are especially hard hit by the rise in fares. We are determined to do more for them. We are increasing the local authority provision for concessionary fares by £25 million


over the next two years. This should enable them to introduce half-fare schemes for all pensioners, and this will go a long way towards reducing the isolation which pensioners increasingly face in the rural areas.
A survey in 1976 conducted by the Department showed that 56 districts have no concessionary fare scheme at all. All of them are either Conservative controlled or Independent-controlled. None is Labour-controlled.
In the case of Humberside all districts in the area, with the exception of Beverley, provide some form of travel concession for the elderly, blind and disabled, but apart from Hull, which provides a generous scheme, few of the other district schemes reach the level recommended in the circular which we have just issued. Clearly, there is scope for improvement on this point in Humberside county. I hope that that opportunity will be grasped in the near future.
If I may summarise what we are doing for transport outside the metropolitan areas, we are making available resources on an unprecedented scale to give people access to a wider social life and better employment opportunities. But there are Conservative counties which have spurned our money. Humberside is one of them. It has cut back its revenue support from £944,000 last year to £645,000 this year. As my hon. Friends appreciate, control of Humberside County Council changed from Labour to Conservative last year.

Mr. McNamara: Is my hon. Friend aware that, because of arrangements made under the Tories when they reorganised local government, we are facing a situation in which the Hull District Council suffers Particularly because of the attitude of the Humberside County Council?

Mr. Horam: Yes, I am very well aware of that point, and I am glad that my hon. Friend has sought to bring it out. I also wish to point out that Humberside is giving local bus operators only 45 per cent. of what they have asked for to keep services going. The result is expected to be a cut of 65,000 bus miles. Furthermore, neighbouring Lincolnshire, which is near to the constituency of my

hon. Friend the Member for Brigg and Scunthorpe, has a figure of only 29 per cent. In other words, the county council has given only 29 per cent. of what bus operators ask for.
Humberside is not alone. Since the Conservatives have gained control in Northamptonshire, we expect that a million miles will be cut out because the county has given local operators only a third of what they asked for. Indeed, as my hon. Friend the Member for Kingston upon Hull, Central has pointed out, the problems are particularly bad in those parts of the urban areas that are free-standing towns within the Humberside County Council.
Scunthorpe has suffered particularly from this problem. It receives no help from the county council towards the services of the established bus operator in the area, which is a National Bus Company subsidiary.

Mr. John Ellis: This is a grievous position. Scunthorpe stands like an oasis trying to maintain services while it has been sabotaged by the county council.

Mr. Horam: Indeed. The fact that urban areas do not receive sufficient support can also damage surrounding rural areas. The same company often serves both areas, and the problem of covering overheads is magnified. This is a severe problem, and I am glad that my hon. Friends have drawn it to the attention of the House.
My hon. Friend the Member for Brigg and Scunthorpe raised the problem of post office closures. I know what care he has taken on this subject over the years. I cannot comment on the figures that he gave. I have figures which do not wholly agree with what he said about the number of post office closures in his constituency, but no doubt this matter can be cleared up. Certainly there can be no doubt that post offices have been closed in his constituency during the last few years.
My hon. Friend the Under-Secretary of State for Industry will have made clear that this is an internal matter for the management of the Post Office, but there is no deliberate Post Office policy to reduce the number of sub-post offices in rural areas. Such offices are closed either where the volume of business demonstrates that there is no longer a public demand for them or where the


sub-postmaster resigns and no replacement can be found. My hon. Friend fairly made that point. His basic argument is valid. This is a trend in country areas and it multiplies the problems faced from other sources.

Mr. McNamara: My hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis) and I have discussed this matter on many occasions. While post office closures in rural areas may appear more dramatic, closures in urban areas, particularly on Humberside, are equally dramatic. Because of main roads, patterns of usage, distances and all sorts of other problems in urban areas, we need more post offices in many of those areas, but we are having them closed.

Mr. Horam: I understand that, but the essential point put by my hon. Friend the Member for Brigg and Scunthorpe was that closures increase the problems faced by people in rural areas, particularly

as they have to go much further to get the same service than they would if they lived in an urban area where there was a post office closure.
In the Budget the Government have once again brought help to rural areas by making more funds available—£20 million in all—for environmental services, which will include the building of small factories in rural areas by the Development Commission, which is particularly responsible for such factory development. It will have more funds available as a result of the Budget. That is evidence of the way in which the Government are trying to help with this problem, which will not go away and which my hon. Friends have demonstrated clearly is particularly acute on Humberside

Question put and agreed to.

Adjourned accordingly at half-past Ten o'clock.

Orders of the Day — Second Reading Committee

Wednesday 12th April 1978

The Committee consisted of the following Members:


Mr. Arthur Jones (in the Chair)


Berry, Mr. Anthony (Southgate)
Mendelson, Mr. John (Penistone)


Bottomley, Mr. Arthur (Middlesbrough)
Miller, Mr. Hal (Bromsgrove and Redditch)


Coleman, Mr. Donald (Neath)



Cooke, Mr. Robert (Bristol, West)
More, Mr. Jasper (Ludlow)


Emery, Mr. Peter (Honiton)
Price, Mr. William (Parliamentary Secretary to the Privy Council Office)


Forrester, Mr. John (Stoke-on-Trent, North)




Pym, Mr. Francis (Cambridgeshire)


Hawkins, Mr. Paul (Norfolk, South-West)
Smith, Mr. Cyril (Rochdale)


Irving, Mr. Sidney (Dartford)
Whitlock, Mr. William (Nottingham, North)


Mellish, Mr. Robert (Bermondsey)

Orders of the Day — HOUSE OF COMMONS (ADMINISTRATION) BILL

10.30 a.m.

The Parliamentary Secretary to the Privy Council Office (Mr. William Price): I beg to move,
That the Chairman do now report to the House that the Committee recommend that the House of Commons (Administration) Bill ought to be read a Second time.
I hope, Mr. Jones, that it will be of help to the Committee if I briefly outline the background to this Bill.
In October 1973, the Speaker announced to the House that, following discussions with party leaders, he had invited Sir Edmund Compton to undertake a review of the arrangements for the organisation and staffing of the House as well as for the co-ordination of the services provided by the present five Departments. Those are the Departments of the Speaker, the Clerk of the House, the Serjeant at Arms, the Library and the Administration Department.
In that announcement, the Speaker referred to the fact that there was some feeling in the House that there was insufficient

co-ordination between the Departments and also some concern about the system of making House appointments and related matters.
In the report which he made to Mr. Speaker in July 1974, Sir Edmund Compton put forward detailed and comprehensive recommendations for the establishment of a unified House of Commons service, bringing together the separate Departments under a new "House Chief Officer." In February 1975, Mr. Speaker appointed a Committee of Members under the chairmanship of my right hon. Friend the Member for Middlesbrough (Mr. Bottomley) to consider these proposals.
It is important to recall how that Committee saw its terms of reference and proceeded with its work. I quote from page 5 of its report:
The main questions that have concerned us have been these: who takes decisions affecting the services of the House; how are they taken; how are they implemented; and how are the staff who serve the House appointed and controlled?


It says much for that Committee—and I would like to pay the tribute of my right hon. Friend the Leader of the House and myself in a few moments—that it was able to report a broad measure of support for its proposals. I quote from page 13:
It is our understanding that they would be broadly acceptable to the present Heads of all the five Departments of the House and, moreover, that Sir Edmund Compton is himself content that they would achieve the principal aims which he himself set in his review.
The report of what I may perhaps refer to as the Bottomley Committee endorsed Sir Edmund's general aim of unification, but instead of a chief officer proposed unified control of the administrative services of the House under a Board of Management made up of the Heads of House Departments. It also recommended the re-assertion of control by Members over House services through the creation of a strengthened House of Commons Commission under the chairmanship of Mr. Speaker.
The Committee's report was debated by the House on a "take note" motion on 4th December 1975 during which the Government indicated their general support for the proposed new framework.
In its report, the Bottomley Committee recognised that some of its proposals would involve legislation—in particular, that for the establishment of the Commission, as well as for the transfer to the Commission of the present functions of Heads of Departments as employers. It recommended, however, that this legislation should be kept to a minimum, and that matters such as the composition and functions of the proposed Board of Management, and the responsibilities of the House Departments, should not be spelt out in the statute but should be left instead to the Commission.
The Government thought that that was right, and the limited scope of the Bill now before the Committee reflects that recommendation. It is our view that it would have defeated the whole purpose of the Bill if the Government, rather than the Commission, had attempted to take decisions on the practical details of how the Commission will work.
Obviously, the Government will be able to assist and advise the Commission where its decisions are likely to affect the work of Government Departments—for example,

the Property Services Agency—but it would be entirely wrong for us to take up attitudes or try to impose decisions on the form of administrative organisation below the level of the Commission.
The Bill is, therefore, essentially an enabling provision whereby a new Commission will be established to supersede the present Commission for regulating the Offices of the House of Commons, which, as hon. Members will know, derives from the House of Commons (Offices) Act 1812.
Clause 1 defines the membership of the proposed Commission, under Mr. Speaker's Chairmanship. It is proposed that, besides the Speaker, the other members of the Commission should be the Leader of the House, a Member nominated by the Leader of the Opposition, and three other Members appointed by the House of Commons.

Mr. Cyril Smith: Could the hon. Gentleman explain why, at this particular point, the Bill has left the recommendations of the Bottomley Committee? In paragraph 4.7 on page 15 of its report, the Bottomley Committee specifically recommended that there should be a direct representation by the minority parties in the House on the Commission. There is nothing in the Bill that guarantees a seat to the minority parties collectively. Could the Minister say why the Government have chosen to ignore that section of the Bottomley Committee's report?

Mr. Price: We take note of what the hon. Gentleman says, but we take the view that this is a matter for the House of Commons. The House of Commons will, in due course, either approve or reject the names we bring forward, and certainly what the hon. Gentleman has said will be taken into account. I give him that assurance.
Clause 2 sets out the functions of the Comimssion and its responsibilities with regard to staff in the Departments of the House. The Commission is required to ensure the continuance of the present linkage between the pay and other conditions of service of House staff and the Home Civil Service.
With regard to the future exercise of Mr. Speaker's powers in respect of the appointment and tenure of office of his own personal staff. Mr. Speaker has


undertaken that these powers will continue to be exercised in accordance with the same principles which are now applicable to staff employed in the Departments of the House.
The opportunity is being taken in Clause 3 to provide that the new Commission—instead of Treasury Ministers as at present—shall in future be responsible for the presentation of House of Commons estimates in respect of the expenses of House Departments and of certain other expenses incurred for the service of the House.
Although this change was not specifically proposed by the Bottomley Committee, we believe that it is entirely consistent with its general approach, and I understand that it is acceptable to my right hon. Friend the Member for Middlesbrough.
The largest element in these future Commission estimates will be staffing costs. The estimates in respect of Members' pay, allowances and pensions will continue to be presented by Treasury Ministers.

Mr. Robert Mellish: Shame.

Mr. Price: Clause 4 defines the range of staff to whom the legislation applies. The Committee will note that the Committee is given power to modify the existing departmental structure of House services, either by creating new departments or abolishing existing ones—or by transferring particular functions from one department to another. Under Clause 4(3) for example, it would be possible—if this was in due course considered necessary—for the Refreshment Department to be made formally a Department of the House.
Clause 5 is concerned with definitions, repeals and implementation dates. It is proposed that the Commission's responsibilities under Clause 2—staffing responsibilities—under paragraphs 3 to 5 of Schedule 2—employment protection legislation—and the repeal provisions in Schedule 3 should come into effect on 1st August 1978.
It is further intended that the new Commission's first annual report should cover 1978–79, and that the Commission's responsibilities with regard to House estimates should begin in respect of the year 1979–80.
Schedule 1 deals with a number of detailed matters including the powers, membership and manner of business of the Commission. Paragraph 5(2) would, in effect, enable the Commission to set up the House Board of Management proposed by the Bottomley Committee.
Schedule 2 is mainly about the application of employment protection legislation to the staff of the House. Although this part of the Bill is rather more complex, the intention is to clarify, rather than extend, the existing rights of the staff.
Schedule 3 has the effect of removing from the statute book a considerable amount of legislative dead wood.
This legislation is, therefore, primarily concerned with the establishment and membership of the new Commission, with its functions and responsibilities for departmental staff, its financial role, the range of staff for which it will be responsible, and the application of employment legislation to the staff of the House.
The criteria against which the Bottomley Committee asked that all its recommendations should be judged were set out in paragraph 3.1 of its report. The Committee emphasised the overriding need to maintain and, if possible, improve the standard of services of the House. It emphasised the need for control over these services to remain with Members themselves, for the House of Commons service to be kept separate from the Civil Service, for the special qualities of each Department to be recognised and for Mr. Speaker to be able to continue to have direct access to senior officials.
The Committee's report also stressed that any changes should foster the co-ordination of Departmental services and the development of a unified staffing policy. Indeed, it regarded one of the most important features of the proposed re-organisation as providing the framework for closer and more systematic discussion and consultation between the management of the House and staff representatives. It regarded good staff relations as critical to the development of a unified service.
The Government fully endorse those aims. In particular, we believe that having the Commission as the statutory employer of all staff in the House Departments will provide, in the longer term, increased scope for common recruitment,


transferability and the growth of central staff consultative procedures, including the relationships which have been established with the recognised trade unions.
It would, of course, be quite wrong if I left the Committee with the impression that these proposals stem from any general sense of dissatisfaction with the performance of the staff in the Departments of the House. On the contrary, we believe that there is widespread admiration and appreciation for the services available to us. But even the best structures need to be reviewed from time to time, and the present Commission is now over 160 years old.
In conclusion, Mr. Jones, I pay tribute to my right hon. Friend the Member for Middlesbrough and to the other member of this Committee who served with him, my hon. Friend the Member for Penistone (Mr. Mendelson). They worked long and hard to prepare a document which has received—and quite rightly so—much praise.
Not only did they succeed in putting forward proposals which found unanimous approval in the Committee, in addition they found a considerable measure of support among the staff involved. We owe them a considerable debt, as will future generations of Members.
The details of the report are for later consideration by the new Commission. What we are concerned about here is the necessary legislative framework for that consideration and, if agreed, their implementation. I commend the Bill to the Committee.

10.43 a.m.

Mr. Francis Pym: At the very outset I should like to endorse the words that the Minister used just now in expressing appreciation of the work done by the staff in this House, in this palace, in Parliament. One need not be a Member of the House for very long to realise that without them the whole place would break down very quickly. There is no question but that every Member is extremely appreciative of what the staff do. What we are discussing in the Bill are new and, as we hope and believe, improved arrangements for the staff and the arrangements relating to the staff in this palace.
The Bill has been widely welcomed, including by the Opposition. There are a number of questions to raise on it and a number of details to debate, but I am not aware myself of any very serious opposition to it, and, as I say, we ourselves support it.
It is not only a Government Bill, because on the back of it is added the name of the right hon. Member for Middlesbrough (Mr. Bottomley), and therefore, in a sense, it is a House of Commons Bill as well as a Government Bill. It has a long history, as the Minister said. It is four and a half years since Sir Edmund Compton was appointed and three years since the right hon. Gentleman and his Committee were appointed. I certainly wish to add my thanks and the thanks of the Opposition to what the right hon. Gentleman and his colleagues did in considering the issues that were brought to their attention.
At the end of the story, this Bill emerges. It is short and it is simple. It seeks to provide only the framework within which the Commission is to operate: all the details are left to be decided in due course by the Commission. I feel certain myself that that is absolutely right: we do not want to confuse them or saddle them with a lot of unnecessary detail. Let us leave it to the Commission, if that is thought in due course to be correct, to take its own decisions.
I have no doubt that the Commission will want advice from Members, quite apart from sources available to the Commission itself. I have no doubt that there is a role still for the Services Committee and its Sub-Committees, still an important function for it to fulfil. One thinks, particularly, of the Library Sub-Committee and of all the work that it does to help and improve the Library facilities for Members, and of the new Computer Sub-Committee.
But I suspect that a tendency could arise for the Services Committee to become, or to be thought to become, less significant All I can say is that, if that should be so, if the Bill allows any flexibility of arrangements for the Services Committee, there is no reason why its structure could not be changed or adjusted in due course if, after the establishment and operation of the Commission, it was found that other advice


to the Commission could be better provided by the Services Committee created in some other form. I see no difficulty about that whatsoever.
As I have said, the Bill is simple. There, is no reference in it, for example, to the proposed Board of Management which was outlined in the right hon. Gentleman's report. Presumably that Board will be set up and will become the most important source of advice to the Commission. I think that it is visualised that the Board will be responsible for working out staff policy and for working towards that degree of unification of the staff structure that is thought desirable, But I hope very much that it will have regard to paragraph 3.1 of the right hon. Gentleman's report and, in particular, to subparagraphs (d), (e) and (h). These refer respectively to the desirability of
a very broad measure of goodwill amongst the staff affected"—
that is clearly desirable; to
The distinct qualities, special expertise…within the present Departments"—
That is something we want to preserve; and, thirdly, to the fact that
Progress towards unification must be gradual".
I think that that would be only wise and common sense and I have no doubt that the Commission will follow that advice.
What seems to me to be required is this. We want the advantage and the benefit of organising the House and the staffing of the House as one complete entity, with better promotion prospects and a better career structure. But, at the same time, we want to retain, do we not, the individuality and the separate characteristics of the different Departments, because they have a special contribution to make simply by virtue of the fact that they have their own specialist expertise. We want to combine both things, and I see no reason why we should not achieve that aim.

Mr. Mellish: I am sure that what the right hon. Gentleman has said about retaining the goodwill and the expertise of the staff is absolutely right. But there is a point of view which I hope to express, if I catch your eye, Mr. Jones. It is the view of some of us, certainly of myself, that the idea that there should be five Departments, full stop, is not right. I shall go on to develop this point when I

make a great speech in a moment That is the one recommendation that I shall quarrel with or argue about later on, because I take the right hon. Gentleman's line that, whatever we do, we must retain the expertise, the quality and the integrity of the existing staff.

Mr. Pym: I am grateful to the right hon. Gentleman for what he has said and for his support. We obviously think alike about that aspect of what is contained in the Bill.
I want to turn for a moment to the financial provisions and to raise three points. I observe from Clause 3(1) that these provisions include.
the expenses of the House Departments and…any other expenses incurred for the service of the House of Commons.
My first point concerns the Refreshment Department and, in particular, its losses. The Parliamentary Secretary referred to the possibility that the Refreshment Department might be added to the list of Departments of the House. It has not been added in the Bill and I do not think that much attention was given to it in the right hon. Gentleman's report. As I was not involved with House of Commons affairs during the period when all this was being considered, I do not know what consideration has been given to that possibility.
But I believe that it is an important aspect which we should raise in considering the financial provisions. I must add that I wish that matters affecting the Refreshment Department were written about more clearly, and I also wish that it was possible to come to some permanent arrangement with the Treasury so that we would not have to go on with this argument. I wish to put this question: is the loss of the Refreshment Department included within the definition in Clause 3(1), "any other expenses"?

Mr. Mellish: I doubt it.

Mr. Pym: I am inclined to doubt it as well. But it is at least arguable that it might not be a bad idea if the loss and the Department were included. That is my first point.
The next financial question relates to travelling expenses and particularly to the travelling expenses of Select Committees, because I believe that the present arrangements are not satisfactory except,


perhaps, for members of Select Committees who enjoy what I may describe as an almost free licence to travel whereever they wish.

Mr. Paul Hawkins: Except the Services Committee.

Mr. Pym: Except the Services Committee. I put it to my hon. Friend that if he is a member of the Services Committee he might put in a request to go and see how these matters are arranged in other parts of the world. If his Committee decides that it would like to do that, there is a process that has to be gone through. The Committee must approach the Chairman of the Liaison Committee in order to get approval for the visit. In the context of these discussions, I suggest that it is not really a suitable body to take these decisions because, in recent years, the number of Select Committees has proliferated, the number of visits abroad has greatly increased, and there is a considerable expenditure on this work.
I put to the Government that there should be some sort of a budget or cash limit for these visits abroad.

Mr. William Price: There is.

Mr. Pym: Should we not control these visits more strictly than we do at present?

Mr. Arthur Bottomley: I happen to be Chairman of a Select Committee and I take a contrary view to most, in that I believe the Select Committees serve a very useful purpose. But there is a budget that is strictly limited. To say that members of Select Committees can travel as freely as they like is certainly not true.

Mr. Pym: I am grateful to the right hon. Gentleman for that interruption. Perhaps I gave an exaggerated impression of their freedom to travel, but I have discussed this matter with my right hon. Friend the Member for Taunton, (Mr. du Cann), who is Chairman of the Liaison Committee, and he is extremely worried about this arrangement and he, as I believe the right hon. Gentleman knows, would prefer that, in addition to or separately from that, it would be advantageous if there were some other way in which the House could decide whether a request from a particular Select

Committee was an acceptable idea. In the context of the Bill, when we are talking about "any other expenses"—and we are talking about tens of thousands of pounds—it seems to me that this is something that we might ask the Commission to take on board as well.

Mr. Sydney Irving: Does the right hon. Gentleman believe that there is another principle involved which has not been conceded? We are having Select Committees adopting a renewed vigour in challenging the Executive. It is true that there is a budget—I happen to be a member of the Liaison Committee mentioned by the right hon. Gentleman—but it is largely determined by the Government. Therefore, the Government determine the means by which the Select Committees adopt their actions to challenge the Executive. That seems to me to be a crippling form of arrangement if the Select Committees are really to do a full-blooded job of challenging the Executive. It further seems to me that, for the first time, it is conceded that while the House can determine its own estimates it should not be able to determine the estimates in respect of Select Committees.

Mr. Pym: I think that the right hon. Gentleman is supporting my argument. In many ways, one could argue that it is wrong in principle for the Treasury to decide how much money should be spent on this matter—it is for the House of Commons to decide how much of the estimates should be spent in this direction. But I would also comment that in this particular aspect the Treasury has, perhaps, been more generous to the House of Commons than in many other ways. However, I agree with the right hon. Gentleman in principle, at any rate, and that is why I raised the matter.
The third matter, which is quite different, really relates to facilities in the House of Commons, because I observe from paragraph 3.1(a) of the report that it states:
It must above all ensure the maintenance and…the improvement of the services…provided for Members in carrying out their Parliamentary duties".
I totally agree with that. One of the greatest obstacles to a more satisfactory execution of Members' duties in my opinion is the building and the facilities within this building which exist—or do


not exist—from the point of view of Members. I just wonder whether it is envisaged that the Commission shall involve itself in that side of our work. It is obviously not a House Department—in that sense it is not involved in it—but I want to raise the question whether we ought not to think about that, whether it ought not to take under its wing responsibility for future building, for major alterations and for accommodation generally.
I think the only category of Members of this House for whom the arrangements could be described as remotely adequate are Ministers, who have quite satisfactory offices in this building and all the facilities that go with those offices, and, of course, they use them as an annexe to their office over in the Ministries. They come over here when their parliamentary business and responsibilities are being discussed in the House of Commons, and can use their rooms here. But for nobody else, as far as I can see, are the arrangements really adequate.
I think the arrangements for the Leader of the Opposition have been greatly improved lately since the Serjeant at Arms was kind enough to make some of his accommodation—or the accommodation he used to enjoy—available to the Leader of the Opposition.
I think also that to some extent some Members now have adequate facilities, but by no means all of them. The worst placed of all—I think I can say this with a certain amount of sympathy from this Committee—are the people who speak for the Opposition Front Bench. I can only describe the conditions that are provided for the Shadow Cabinet and the people who speak officially for the Opposition as absolutely intolerable. The only reason why I and my right hon. and hon. Friends actually tolerate these conditions is that there is nothing we can do about them.
I have one tiny room where, by arranging the furniture in a particular way, I can have a meeting of six people at the most, with a great squash. But there is no room nearby for my secretary—not within minutes of walking distance is there a room for her. So if I go out, I press the button down and get messages on the board when I come back. But there is no proper office arrangement in the sense that exists for Ministers and

practically anybody who carries this tremendously weighty responsibility.
It is no purpose, obviously, of this Committee to go into all the inconveniences and problems facing people who speak from the Front Bench for the Opposition or for anybody else. But I raise it now because it is a matter of importance to the satisfactory working of the House of Commons, and improvement does appear to me to be necessary. Anybody who speaks for the Opposition Front Bench should certainly have an adequate office and, next door, an adequate office for his secretary, so that they can work together in a team, just as every Minister, however junior, has adequate facilities here. Such facilities need to be provided. In the context of what we are talking about in this Bill, it seems to me that, in some way or another, we ought to make much more progress than we have been able to hitherto. It seems to me to be relevant to the debate to bring the situation to the attention of this Committee, and thereby to the House.

Mr. Mellish: I want to get it on the record that of course I accept what the right hon. Gentleman is saying, but let it be clearly understood that these slum conditions under which members of the Shadow Cabinet are now working were also suffered by Labour in opposition when the right hon. Gentleman's party was in Government. We had exactly the same slums. So let us get it right. These conditions are not something that suddenly has emerged and we gave the Conservatives a rather rough lot of accommodation. It is exactly what we used to have.

Mr. Pym: Of course, that is totally understood. What has happened, in fact, is that when there has been a change of Government, the incoming Government have always done something to help those who have taken their place in Opposition. I think that we move much too slowly in this direction—I will not list the quite minor changes that one party has done for the other when it has taken over in Government. I am making the point, not in any kind of political sense, of course, that the arrangements that I described as intolerable are at any rate a bit better than they were before. What I am saying is that whatever happens at the next election is irrelevant. Far better facilities


will have to be provided for those who carry the responsibility for leading the Opposition in the various Departments. That is the only point that I make on that matter.
I wish to raise a few minor points, because I have been speaking for rather a long time. Clause 2(3) states that pensions
are kept in line with the provisions of the principal Civil Service Pension Scheme…",
and obviously that is right. Does that represent any change as regards the staff of the House of Commons, or does it simply continue arrangements that already exist?
Secondly, I think it is absolutely right that the appointment of Mr. Speaker's personal staff should be reserved for Mr. Speaker himself. There is no definition in the Bill of "personal staff", but I do not think that there will be any problem in understanding the meaning of the term. I wish to make the point that I think that that is absolutely right.
Thirdly, I take it that all matters of security are excluded from the responsibility of the Commission. Clause 4(4) says:
An office or post falls within this subsection if staff appointed to it are employed in or for the purposes of the House of Commons." Commons.
I think that it would be right for security to be kept away from the Commission and to be handled and managed by those who understand it—the police and the security services.
Lastly, Schedule 1, paragraph 2(2) says that
a member of the Commission…shall hold office for the duration of the Parliament in which he is nominated…
I think that it is absolutely right to make the nomination for a Parliament, so that the Commission lasts for the whole of that Parliament and we do not have the practice whereby, each Session, the Commission has to be reappointed. When it is appointed at the beginning of a Parliament everybody will know that, subject to any changes that are called for, for one reason or another, it will be a permanent body and will sit for the whole of that Parliament. The staff will know that. No doubt many of the members of the Commission will go on for more than one Parliament.
Those are the points that I wish to raise. No doubt some of them are Committee points, but I thought it would be helpful if I made them now. We think that this change will undoubtedly prove of benefit to the staff and, therefore, indirectly of benefit to the House of Commons and of benefit nationally. There is no question, but that the principle behind the Bill, and the direction in which it goes, has the support of the Opposition.

11.3 a.m.

Mr. Arthur Bottomley: I acknowledge with gratitude the kind remarks made by hon. Members about my Committee and the work that it did. I thank the Minister and the right hon. Member for Cambridgeshire (Mr. Pym).
This Bill implements proposals that were made in the report of the deliberations of the Committee, of which I had the honour of being the Chairman, and I wish to start by paying tribute to my colleagues who served with me and to thank them for their co-operation and hard work in producing a unanimous set of recommendations.
I also extend my grateful thanks to Messrs. Michael Ryle and Michael Townley, who served as joint secretaries to the Committee, for their conscientious and loyal service to the Committee as a whole, and particularly to me. I, like the Minister and the right hon. Member for Cambridgeshire, pay tribute to the staff as a whole. They co-operated in their usual highly efficient, loyal way and gave of their best.
It was Mr. Speaker Lloyd who asked me to take on the responsibility of seeing whether improvements could be made to a report by Sir Edmund Compton. That report was not acceptable to the House of Commons because it meant that the services of the House would be run like a Government Department and staffed by civil servants. It would have resulted in right hon. and hon. Members of the House having less control over their affairs. I do not believe that there was anything sinister in Sir Edmund Compton's proposals. The Government certainly felt that there should be freedom for the House of Commons to control its own administration, by granting a limited financial independence from the Treasury following the presentation of my report.
We are grateful to the Government for going a little further than we expected. We shall have only ourselves to blame in the future if the services are insufficient but, equally, we have a full sense of the importance of economy in public expenditure, in the same way as the Treasury has. I am sure that the Commission will work for a gradual improvement of services, whilst being most careful to avoid unnecessary expenditure.
I confess that at one time I had anxieties about whether a Bill to implement the recommendations of my report would be presented to the House. The report was laid before the House in August 1975, and it was followed by a debate during which the Government spokesman said that legislation would be required for its implementation, and added that
it will be possible to make progress fairly rapidly".—[Official Report, 4th December 1975; Vol. 901, c. 1979.]
It has actually taken three years. However, the Bill is now before us, and it is to that we have to direct our attention. It sweeps away the 1812 Act and, I believe, provides a modern framework for the staff employed in the House of Commons.
The present Departments and arrangements for the administration of the House and the services to our Members have grown up like a family of topsies over many centuries. Each Department has been largely autonomous, and the co-ordination of services has not always been easy. The system might have been appropriate in more leisurely days when problems were simpler, but services for Members are now growing in complexity as well as in volume.
Let us look, for example, at the increased provision of accommodation for Members and their secretaries in the Norman Shaw buildings. The right hon. Member for Cambridgeshire will acknowledge that this is only a recent step, but it is in the direction that has been urged by hon. Members. I sympathise with him and support his proposition that more accommodation ought to be provided for responsible people who take an active part in the affairs of the House.
There is also the development of much more sophisticated services. An example of this is the Library, which is now more

sophisticated than it used to be and where computers have been introduced.
I note particularly, as has been mentioned already, and what I think to be right, the increasing importance and changing practices of our Select Committees and the growth of other Committee work. Accordingly, it seems to many Members that the time has come to bring the separate Departments of the House closer together and to bring them and the services provided to all Members under the ultimate control of the House itself.
That was the theme of our report, and the Bill implements our major recommendations so far as they involve legislation. Therefore, I warmly commend the Bill to the Committee. I hope it will pass speedily into law because it is important that the proposed House of Commons Commission is set up as soon as possible so that it can commence work before the end of this Session. For that reason I was delighted to hear the observations of my hon. Friend the Parliamentary Secretary about the Bill's progress.
Before turning to general details I should like to commend two aspects of the Bill. First, my Committee recommended that legislation should be kept short and simple. I am glad to see that, apart from the unavoidable legal complexities in Schedule 2, the Bill follows that prescription.
In particular, while the Bill establishes the overall authority of the Commission and sets the framework for a unified House of Commons service, it avoids laying down inflexible legislative detail and administrative organisation below the level of the Commission. For example, the appointment of a board of management, consisting of the Clerk of the House and other heads of Departments, as we recommended, remains a matter for the Commission to decide, as does the way in which the Commission should delegate to heads of Departments its function as employer of all our staff. These are all important matters, and the success of the reorganisation recommended by my Committee will depend largely upon how the proposed Commission fulfils its responsibilities.
The second general point is symbolised, as has already been mentioned, by the


Chairman of the Committee which produced the report being associated with the sponsorship of the Bill. Although this is a Government Bill, and rightly so, it affects all Members of the House, and all parties. It proposes that the ultimate authority in this House, in conjunction with Mr. Speaker, should be not the Government alone, but rather a body comprising Mr. Speaker, representatives of the Government, the official Opposition and other parties, and Back Benchers. Indeed, the Government themselves will not have a majority on the Commission. It should be welcomed that in this as in other ways the Bill will greatly strengthen the control of the House over its own affairs and will protect its legislative independence from the Executive.
Another detail is important, and this is that the responsibilities of the Commission as an employer of all our staff cannot lapse during General Elections. The right hon. Member for Cambridgeshire spelt that out clearly, so I do not think that there is anything more for me to say, except that the Commission is for one Parliament.
The Bill also provides that the pay, pensions and conditions of service of the House of Commons staff shall be kept in line with those of civil servants. This is the position at present, but the Bill, by making that a statutory requirement, ensures that we shall be able to continue to recruit staff at least as good as those serving the Government.
I am glad to be able to report that these proposals are generally welcomed by the staff of the House and by the unions that represent them. Clearly, different sections of the staff will have different reactions, but the creation of a unified service will permit the development of a better and more co-ordinated staffing policy than we have at present.
Although the Clerk of the House, the Serjeant at Arms and the Librarian, for instance, each acts as a separate employer, recruiting and promoting his own staff, under the Bill it will be possible to develop, gradually, common recruitment, promotion and training for all Departments in the House of Commons. This will facilitate the interchange of staff between Departments, and so help the promotion

of those who merit it. It will also make it possible to develop much fuller and more systematic arrangements for staff consultation through the Whitley machinery than in the past. As I say, all this is welcomed by many members of the staff.
In general, as a result of the Bill, we should have a much improved career service for all our staff. A man or woman entering the service at any level should be able to rise to whatever post for which his or her talents equip him or her. As we have said in our report, so far as possible all the more senior appointments, including, for example, the Serjeant at Arms, should be made from within the service. I am convinced that development on these lines will not only be good for staff morale, but will help to provide the best possible service to Members of the House.
Although Clause 4 gives statutory authority for the continuation of the present Departments of the House, I hope, and I know, that they will, for many purposes, work as one. We suggested certain changes, in particular the disbandment of the present Speaker's Department, so that Hansard came under the ultimate control of the Clerk of the House for administrative purposes, and so that the Vote Officer was similarly linked with the Library. Reorganisation, however, will be carried out by the Commission, and propositions made to the Commission would have to be considered if it was thought that that was not the best way of doing things. I should have thought that at some time the catering services would have to be looked at by the Commission. I welcome this element of flexibility in the Bill. The Commission will be able to judge, in the light of experience, how the work is best distributed among the Departments.
Similarly, flexibility is allowed for in Schedule 1 regarding the Commission's procedures and the exercise of its powers. Here again I hope that it will, as soon as possible, establish the Board of Management that we recommend and give that Board general policy guidance on, for instance, the development of a unified staffing policy. It will be very important for the Board to be fully aware of the decisions and views of the Commission, and also for the Commission to have the


advice of senior staff through the Board of Management.
I hope that the Commission will establish a good working relationship with the Services Committee of the House so that it will be fully aware of the interests and the wishes of Back Bench Members. These two bodies will have to work closely together.
The Bill marks the start of a new chapter in the organisation of the House of Commons. Its proposals sweep away many old and outdated arrangements—for instance, the independence of Departments as separate employers—and provide for the creation of a new framework of authority for the services of the House, centred on the Commission. Above all, it provides for the House itself to control its own administration, services and staff.
Much will depend on how the Commission goes about its work and on how well the Departments learn to work together and to co-operate within this unified service. However, as we said in our report, the Commission should not rush these changes or risk damaging the well-tried devotion of the staff to their present Departments by too rapid change. Approached with care and caution, the Bill should enable the provision of even better services for the House. I am sure, from what I have heard already, that there will be a speedy and unanimous decision on the Bill at the end of this debate.

11.17 a.m.

Mr. Cyril Smith: I, too, would like to give a general welcome to the Bill and, first, to compliment the Government on the speed with which they have produced it since the initial debate in 1975. That seems to me to be in accordance with the general speed in this place when dealing with matters concerned with, for instance, the welfare of Members or the welfare of staff.
I want not only my party but all the minor parties to be associated with the tributes that have been paid to the staff of the House this morning, and I wish to associate myself, on behalf of those parties, with the assurance that no criticism of the existing staff is implied in our support of the Bill.
I am delighted that the proposal is not to merge Departments, but rather to persuade

them to work together. In my local government experience, when I was chairman of an establishment committee I was never keen on the merging of departments. I am not sure that it is good for staff morale. I think that there is a great deal to be said for independence of staff, for the staff feeling that they have direct responsibility to the people who take decisions, and so on. To have created a machine where all five Departments were merged into one would have been a retrograde step, and I am delighted that that is not envisaged.
Perhaps I might make one comment on what has been said by the right hon. Member for Cambridgeshire (Mr. Pym) and, indeed, by the right hon. Member for Middlesbrough (Mr. Bottomley). All Members of Parliament are responsible Members of Parliament, and all Members of Parliament have a job to do, whether they happen to be on a Front Bench or on a Back Bench, and whether they happen to be Members of the Government party or of the official Opposition.
The conditions under which Front Bench Members of the Opposition have to work—I agree entirely with the right hon. Member for Cambridgeshire—may be quite disgraceful. I have been in only one of the offices to which the right hon. Gentleman referred, and therefore I have not seen them all, but they may very well be disgraceful. But the accommodation for the rest of the Members of Parliament is equally disgraceful. Just as it is inconvenient for the right hon. Member for Cambridgeshire that he cannot reach his secretary as quickly as he would like, so it is inconvenient for me that my secretary has to cross a major road and traffic before she can reach me.
These criticisms are not applicable to only one section of Members of the House. I am sure that I have the support of the right hon. Member for Cambridgeshire in that contention. It may be that a certain section ought to have priority when it comes to putting these matters right, but I hope that improvements will not stop there.
The main issue that I want to raise—it was the point of my intervention during the Minister's statement—is the right to representation of minority parties in the House. It has been said that this is a House of Commons Bill, and that is true.


Therefore it is right and proper that minority parties, who have equal rights in this House, or ought to have, and who certainly have a responsibility to represent their constituents in exactly the same way as members of the official Opposition and of the Government represent theirs, should have a guarantee of representation on this Commission.
The right hon. Member for Middlesbrough said that the Government will not have a majority on the Commission. How does he know? All that the Bill says is that three members should be elected to the Commission. How do we know that all three will not come from the Government party? What guarantee is there of that not happening? I accept that the usual channels will make sure that it probably will not, but there could well be a nice carve up, with two and one from the majority parties, and with the minority parties left out.
The right hon. Member for Middlesbrought, on page 15 of his report, in paragraph 4.7, refers to
three senior back-benchers (including one representative of minority parties).",
but there is no guarantee at all, within the terms of the Bill, that the minority parties will have any right to representation.
We are asked to be good boys—and girls if one thinks of the Scottish Nationalists—and behave ourselves and we can be in no doubt that those who have all the power in this place will give us a seat. It is said that we can be sure of all that; that all we have to do is to behave ourselves and things will be arranged between the Whips, and so on. But our experience of the past does not lead us to be too happy about verbal promises. I look at the Government's former Chief Whip and I remember the way in which he and his colleagues treated us in relation to our seats in the European Parliament. Quite arbitrarily—we were not consulted—our representation was reduced from two seats to one.
I remember the arguments that have gone on during the last six months, or the last 12 months—perhaps my memory is playing tricks—about a seat for minority parties on the Committee of Selection. Constantly on the Floor of the House we

have had to block nominations to that Committee to replace serving members merely to make the point that we, as minor parties, are entitled to a seat on that Committee.
What guarantee have we—when I say "we" I mean not only the Liberal Party but all the minority parties—of getting a seat on this Commission? It is important that there should be one such seat if numbers are maintained at anything like the present level. It is important that there should be a guarantee of that.
We have to make representations to bodies such as the Service Committee, the Catering Sub-Committee, and so on. They affect us in exactly the same way as they affect every other Member of the House, and whilst we find the Deputy Chief Whips of both the Labour Party and the Conservative Party extremely helpful—I say that sincerely—none the less they themselves have then to argue the matter with their colleagues. I should be much happier—it is certainly not a reason for voting against this Second Reading—if there were some guarantee in the Bill that minority parties will get some form of representation.
I understand the problem. One cannot write in "a representative of the minority parties", and there is the matter of how he is to be elected and how one does it, but I suggest to the Government that they should consider the idea. I am sure that it would be acceptable to the minority parties. It certainly would be acceptable to my party, and I should prefer to have consultations with the others if the idea commended itself to the Government. Perhaps the Government could say that there will be two representatives of the House and a representative to be nominated by Mr. Speaker after consultation with the minority parties. There should be something of that character to guarantee some sort of consultation and the possibility of minority parties having a seat on the Commission.

Mr. Arthur Bottomley: The hon. Gentleman has just explained the difficulties of trying to put into legislation who should be appointed to the Commission. He is aware of the immense good will that exists on this issue. A shadow Commission is in being, and the leader of his party happens to be a member of that Commission.

Mr. Smith: I assure the right hon. Gentleman that what I am saying this morning has the support of the leader of my party. I do not always say that that is so, but on this occasion we are in complete agreement. Perhaps that in itself is a point that is worthy of note, and the point at which I should sit down.
I commend the Bill to the Committee. I hope the Minister will accept that there is no question of our voting against this Second Reading, or anything of that character. This is not a matter on which we should want to divide the Committee, but I very much hope that between now and the Bill receiving its final approval some thought will be given to how direct representation on the Commission can be given to minority parties.
The issue could be left open in a way that would allow it to be altered in future years if there were a reduction in numbers. I suspect that that will not happen, although there might be a variation in how the numbers are arrived at. Perhaps there should be some way in which Mr. Speaker can nominate a member to the Commission. Perhaps it could be indicated in the Bill that, all things being equal, it would be expected that the member nominated by Mr. Speaker would be a representative of the minority parties.
With those comments I, too, welcome the Bill and commend it to the Committee. I am sure that it will have the full support of the minority parties in the House.

11.27 a.m.

Mr. Robert Mellish: The hon. Member for Rochdale (Mr. Smith) will understand that what he has just said will, of course, be noted by the Government, and that there will be discussions between the leader of his party and, I should have thought, Government representatives and Opposition representatives to see how best his point can be met. This is the sort of procedure that one has to follow in cases where, in putting words into a Bill, one finds it almost impossible to give guarantees.
There must be in this House—I think the hon. Gentleman knows this because he has been here long enough—a feeling of trust and good will between both sides. If that does not exist, nothing exists. I am fairly certain that when those responsible wrote those words about three Members

of the House they had minority parties in mind. I would go further and say that it is imperative that this Bill, as has already been said, is a House of Commons Bill. It has nothing to do with parties. With great respect to what the hon. Gentleman says about minority parties, I should be concerned about the quality of the Members who go on this Committee. It is not relevant to me whether they are Liberals, Tories, or Labour Members.
I start off in that spirit by saying that I feel very old and ancient. Looking around, I suppose I have the longest membership of anyone here of the House of Commons. I have been here for well over 30 years, non-stop, and if anyone wants to challenge that, he can. In all that time I have had nothing but affection and respect for the staff who work in this House. In the Clerk's Department, in the Serjeant at Arms Department and everywhere associated with this House I have found that staff go out of their way to try to help the ordinary Back Bencher, or, if someone is exalted in position and becomes a senior Member they will go out of their way to help him, too. Whatever I say, let it be clearly understood that I am not critical of any Department or of any section of the staff.
I commend my right hon. Friend the Member for Middlesbrough (Mr. Bottomley) and his colleagues for what I regard as an excellent report. I say at once that this Second Reading of the Bill will receive my overwhelming support, but I hope in Committee, if I am allowed so to do, to find some way to alter the Bill as it now stands for one purpose only, and I declare it straight away. I think that these proposals—the Bottomley proposals as they are called—have done one thing that could cause damage in the future, and that is their reference—or non-reference—to what I call the Official Report department—Hansard.
I happen to be one of those who, down the years, have had the chance to see the Official Report, department of our House in action, again and again, and so have many other Members. It is unique. Hansard—if I may refer to it as that for easy reference—is one of the most brilliant departments in the House. It is very personal to Members what they say and what is taken down by the Official Reporter upstairs.
We all know—let us get it clear—that we have the right to go upstairs and check our speeches. Sometimes, if the Editor allows it, we can make our English a little better than it was put down, but it is edtiorial control. It is an editorial decision whether a speech is altered in any fundamental way. It has nothing to do with the Clerk. It has nothing to do with the Serjeant at Arms. It has nothing to do with anybody in this House except the Editor of Hansard, who will listen to what the Member says and then decide whether there should be any change. My experience is that in the vast majority of cases he will not allow any change at all.
Any Member who goes up to the Official Report to try to get that speech altered so that it will suit his political content, or who wishes that he had not made certain remarks, will find that that is not on with the Editor. The Editor may use his discrtion in allowing the grammr to be improved, but the content—no.
If a Member has any complaint about Hansard, or if he questions whether it has done the right thing, to whom does he go? He does not go to the Clerk of the House or to the Serjeant at Arms. He raises the matter with Mr. Speaker on the Floor of the House, and challenges Hansard. If I may give an instance, I remember that on one occasion it was reported in Hansard that I had made an interjection. I was quite staggered when I saw it the next day, because I had not been in the House at the time. I raised a point of order with Mr. Speaker, who immediately said "I take note of the right hon. Member's complaint and I shall see that this is taken up with those responsible." Mr. Speaker did not go to the Clerk of the House or to the Serjeant at Arms. He saw the Editor who, the next day, published an apology and a correction in Hansard, and that settled the matter. It may be stating the obvious to my colleagues who are as experienced as I am when I say that Hansard is personal to us as Members and that the only access for change in Hansard is through Mr. Speaker, and no one here can challenge that.
The Bottomley Committee, when it considered the whole question of the future of the administration of the House of

Commons, quite rightly recommended that a Commission be set up—a move which I strongly support. That is absolutely right, and the Commission will have a great deal of power and authority. But—and here it is in the Bill—it was decided that there would be five Departments.
When it came to considering the Official Report—if I may be permitted my own parlance—the Committee said "What the heck do we do with this lot? I know, we will shove them in with the Clerk". So, for reasons best known to itself, which I have been unable to discover from the report, the Committee decided to put the Hansard Reporters in with the Clerk.
This is an ambiguous situation. What has Hansard to do with the Clerk? The Clerk can have nothing whatever to do with Hansard as such. Therefore, I give notice that in Committee, if I am allowed to do so, I shall table amendments to ensure that Hansard is regarded as a department in its own right so that it will have access to the Commission as a department and not through the auspices of the Clerk.

Mr. Pym: Where in the Bill does it say that Hansard is included within the definition of the Department of the Clerk of the House of Commons?

Mr. Mellish: The report decided that Hansard should be linked with the Clerk, and in the Bill there is reference to the Department of the Clerk of the House. There is no reference in the Bill to Hansard being a separate department per se. It follows from that—it must be so; it is the only interpretation that can be placed upon it—that because Hansard is not mentioned in the Bill as a separate department it will be tagged off, if that is the correct term, into the Clerk's Department. There is no other interpretation.
Indeed, that is part of the case of Hansard. I have discussed this matter with some of the staff—excluding the Editor and Deputy Editor, who of course would be somewhat embarrassed if I included them as being part of the argument. I am talking of the staff of Hansard. There can be no interpretation for them other than that because the report said that Hansard would be associated with the Clerk, it follows from what is in the Bill that the Clerk's Department


will be responsible for Hansard. The only way in which that can be remedied is for Clause 4 to mention not five Departments, but six, and I shall table an amendment to say that there should be a department of Hansard, which will clear up this anomaly.

Mr. William Price: It is not my understanding that the Bill specifies five Departments although it certainly does refer to the five about which we are talking. However, it goes on to say quite clearly that if there was any possible doubt about the matter the Commission could, under Clause 4(2)(a) increase or reduce the number of House Departments, and of course, that could apply to Hansard if the Commission took that view.

Mr. Mellish: That is why my point is more valid than ever. I want to clear up this anomaly before it goes too far. I want to get it on record today and that is why I am using the democratic process of this Second Reading debate to state my case about Hansard. I ask that it be regarded as a separate Department and that it has the same access to the Commission that will be appointed as is available to any other Department. That will save the Commission, if I may say so, having to do the job later on. We should do it for the Commission.
I do not believe that there is anyone in the Clerk's Department who wants anything whatever to do with the Hansard Department. I do not think there is anyone in the Serjeant at Arms' Department who wants anything to do with the Hansard Department. They know nothing about it anyway, and they have enough problems of their own. The weakness of the Bottomley Committee, if it had a weakness—it is hardly a weakness, I suppose—was that there was not a single journalist present as a member of that Committee. It so happens that Hansard really does accord with all the great principles to which we have always adhered, with regard to freedom of the Press, and the right of editorial function, and the rest. Hansard is personal to the House. Had I been a Member of the Bottomley Committee, I would have stressed strongly the special peculiarities of the Hansard Department. That is the only reason why I intervene.
The Bottomley Committee said that it did not think it

appropriate, at this stage, for the Official Report to be made a fully independent Department of the House.
But it went on:
On the other hand, we recognise both the importance of maintaining the independent authority of the Editor and the need to bring him into much closer contact with the general problems of House administration.
The report went on to recommend that Hansard should
come under the general administrative control of the Clerk…
but then added that it should not be
an integral part of the Clerk's Department.
What rubbish is that? What does "come under the control of the Clerk" mean, when I have already said that it has got nothing to do with the Clerk anyway? We are not talking about a handful of people just doing a tiny little job upstairs. I have figures here of the position up there. There are 30 on the editorial staff—Editor, Deputy Editor, Assistant Editors, Deputy Assistant Editors, Senior Reporters and Reporters—26 transcribers, who are responsible for transcribing in type form tape-recorded debates, and six office clerks and assistants, in that Department. The Annunciator staff are also under Hansard. Surely there is a case here for Hansard being a quite separate Department in its own right.
Do not let us have any ritual about this—either it is a Department, or it is not. The staff are personal to us and personal to Mr. Speaker, or they are not. One of the anomalies that has occurred over the years is that, although the Hansard staff have been allied under Mr. Speaker—of course, he has always treated the staff with great courtesy, fairness and firmness—they have not really had personal access in staff matters as other Departments have had. They have always felt rather the Cinderella of the House—ignored, tucked away upstairs, nobody caring anything about them at all as long as they did their job right and reported everything we said and made our English a little better than it might otherwise have been, and so on.
Suddenly it comes home at a time like this, and from speaking to the staff as I have done I know not only how important the members of Hansard are, but how hurt they are.

Mr. Arthur Bottomley: Because we thought Hansard was cut off it was considered that it might be convenient for


the services as a whole, which were to be unified, for Hansard Department to come under the Clerk's Department for administration purposes but certainly not under the control of the Clerk of the House. It was considered that it would work entirely—because it will be an expert Department with identical knowledge to that which it has at the moment—as it does now. Only for administrative purposes would it be associated with the Clerk of the House. But if my right hon. Friend feels strongly I can assure him that the members of the Committee would not be adverse if the Committee as a whole put pressure on for reconsideration of this matter. It would not be necessary to put it in the Bill, but it could be done by the Commission itself if it thought fit.

Mr. Mellish: I am very much obliged to my right hon. Friend and it is in the spirit of that good will that I will not go on with this argument. I think that I have made my point. He will forgive me, but I do not understand what he means when he uses phrases such as "for administrative purposes". Some day someone will explain that general phrase to me. What in heaven's name does it mean?
The Clerk's Department is not going to pay Hansard's salaries. It will have nothing to do with the running of that Department. It will have nothing to do with what is put in Hansard or taken out. I am not quite sure what is meant by the phrase.
Surely my case is now established. As a good lawyer says, I will rest on my case and leave it at that. At the end of the day, I will, with great respect, challenge the position purely on my right as a Back Bencher—no more—and put down an amendment and re-phrase some of these arguments in Committee. With this good will, these very decent people will see that this House not only recognises what they do but appreciates it and makes them a Department of the House, which they have every right to be.

11.41 a.m.

Mr. Peter Emery: I shall be very brief in my remarks, but this is a Second Reading debate and we are meant to debate a little in this Committee as we would on the Floor of the House. I take up the remarks of the right hon. Member for Bermondsey (Mr. Mellish). I sympathise

very much with the right hon. Gentleman in wishing to ensure protection for the members of the Official Report—Hansard, as we always lovingly refer to it.
I do not accept entirely the idea that it is the Cinderella department. Indeed, its fame often spreads very much further—in its reputation—than that of many other Departments of the House. One has only to go to the Council of Europe to know how the whole of Europe looks to Hansard to cope with the whole of the recording of the debates of the Council of Europe. Internationally, in parliamentary circles, the Official Report of the House of Commons—our friends Hansard—has a reputation which is to be envied by any other Department in the House of Commons.
I can well understand the right hon. Gentleman's argument. He would not want Hansard to disappear under the Clerk's Department. But I have read the Bill and I have read the Bottomley Report. I shall quote from paragraph 4.50 on page 22 of the report.
The Editor of the Official Report…said that, if the Speaker's Department were split up he hoped the Official Report would be constituted a separate Department…
As I understand it, Mr. Speaker's Department is to be retained. My own interpretation, therefore, is that there is not to be any alteration as far as Hansard is concerned but that it will still fall under Mr. Speaker's Department. Perhaps the Minister will clear up that point, because if that is not to be the case, I may find myself in absolute agreement with what the right hon. Member for Bermondsey said, rather than just in agreement in principle with his wish to defend Hansard, my interpretation being that it will probably be looked after as it would want.
I wish to ask a question of the Minister. It may go somewhat further than any matter raised in the debate at the moment. I refer to—and rest my case on—the first of the criteria of the Bottomley Committee, stated on page 11 of the Report, that:
It must above all ensure the maintenance and, where necessary, the improvement of the services—advisory and practical—provided for Members in carrying out their…duties.
I understand why, perhaps, the Committee did not deal specifically with the question which I want to raise when I look at the terms of reference, which held


the Committee particularly to the work of the five existing Departments.
I speak as a very junior Member of only about 19 years service in this House—

Mr. Mellish: A mere boy.

Mr. Emery: That is right. I have a long way to go, but I have the years in which to do it. But the one service that I require from the House is the printing of my papers on a daily basis. There are the complications of working in bad offices without our secretaries next door to us; but when we do not have properly printed papers our task in operating as efficient Members of Parliament is made three times more difficult by that than by any other single aspect that I can think of. I see Members nodding assent to the point I am making.
But I want to ask this question. Would it be possible under the Bill for the new Commission to decide to ask one of the Departments to set up a printing structure under that Department for the provision of papers in the House for Members of Parliament? I sub-divide that question and ask that better emergency arrangements be made for printing so that when the present arrangements break down we have better stand by facilities than at present.
I am not immediately attempting to be massively critical of the present standby facilities. I think that the staff are remarkable in the way that they obtain and collate papers at a moment's notice on their reproduction machinery on one of the lower floors in order to keep going the rather inadequate flow of papers that we have at the moment. Therefore, my direct question is whether there is the possibility under the Bill that the Commission could consider this matter and, because it is so important in the administration of the whole House, decide to take new and positive action to enable us, the Commission and the House of Commons, to control and deal with our own printing. I should like a direct answer to that question because it seems to go further than any of the other questions raised.
Other than that, in principle it seems to me that the Bill is sound, and goes a long way towards doing what we want. It provides the types of control that Members

want. We hope that those who will give their time to serving on the Commission will do so over a number of Parliaments, so that their experience can go from one Parliament to the other. I welcome the Bill in general, but for the specific question which I ask the Minister to deal with when he replies.

11.48 a.m.

Mr. Sydney Irving: I, like other right hon. and hon. Members, would like to pay tribute to my right hon. Friend the Member for Middlesbrough (Mr. Bottomley) and the members of his Committee for the work that they have done. We are very grateful to them. I should also like to pay tribute to the staff, because the excellence of the work done here owes a great debt to the quality and devotion of the staff of the House. I speak as a member of many Select Committees and as chairman of some, but I think that it applies to all the services. I have had every reason to be grateful over many years for the help that I have received, and I should like to put that on record. I am also pleased to recognise that we are seeking here to enact means of improving and co-ordinating the conditions for the staff.
So far as I am aware, we are the only Parliament where the Members are entirely dependent on the Government and on the Government's willingness to vote money for parliamentary purposes. There is an entire departure of principle here. For the first time, we are enabled to vote money directly for these purposes. I welcome this development and hope that it will be extended to a number of other areas.
I think that there are two omissions in the Bill, both of which have been referred to. The first concerns the Select Committees. I am a member of the Liaison Committee and we meet regularly to consider how we can squeeze the requests of the Select Committees into the limited budget being provided. Select Committees are adopting a much more vigorous and challenging approach to their duties. It is bad in principle that they should be beholden to the Executive for the money to carry out this function. As the right hon. Member for Cambridgeshire (Mr. Pym) said, it is true that things have improved, but there is a principle at stake and I think that the Committee and the House should be independent of the Executive in carrying out these duties.
The other matter to which I should like to refer was also mentioned by the right hon. Gentleman, and that is the pay and conditions of Members. I am disturbed about a state of affairs which reflects no credit on anyone in the House. We have allowed our pay and conditions to deteriorate to a point where people in industry and the professions look with incredulity—

Mr. Mellish: And contempt.

Mr. Irving: —and contempt on the state of affairs that exists here and wonder how we ever allowed ourselves to get into this position.
I am not asking for or urging an immediate increment for Members of Parliament.

Mr. Mellish: Why not?

Mr. Irving: What we are talking about is the principle by which our pay and conditions should be determined. We are not talking about whether we have a Boyle Committee or any other arrangement. We are talking about how the House faces up to the decisions that have to be taken and the recommendations that have to be made when such matters are determined. The Bill establishes a new principle upon which, I hope, the House faces up to the decisions that have Select Committees and the pay and conditions of its Members and staff.
Leaving aside these two omissions, I welcome the Bill and hope that it will have a speedy passage through the House.

11.52 a.m.

Mr. Hal Miller: As the most junior member of the Committee, although the youthful ebullience of some of the other Members might give the lie to that, I should like to say how comforted I am to hear that my elders and betters have the interests of all Members at heart, be they the facilities provided for the Opposition Front Bench, or the pay and conditions of ordinary Members. However, we are this morning supposed to be considering the interests of the staff.
I, as a very junior Member, should like to pay my tribute to the staff of the House. It would be impossible for me to perform my duties without the help of all the staff—not just Hansard, or the

Clerks, or the Library or, indeed, the gentleman who tries to keep my expenses straight and the wise advice I was given not to run into debt when I first met that forbidding figure, the Accountant, but all of them. We owe them a real debt of gratitude.
Perhaps I should declare an interest at this stage, in that I am an honorary adviser to the Association of First Division Civil Servants. Beyond drawing attention to its memorandum to the Bottomley Committee—if I may so describe it—I need not speak in any more partial sense today. It is a House of Commons matter, as the right hon. Member for Bermondsey (Mr. Mellish) told us.
It is our staff that we are considering, and we have a real responsibility to ensure that their pay and conditions are adequate, that their opportunities are adequate, that their training is adequate, and that their entry and promotion conditions are fair. We shall be falling down on our responsibility to our staff if we do not do that. The Bill gives us a chance to do just that, which is why we should give it warm support.
I particularly echo the words of the right hon. Member for Middlesborough (Mr. Bottomley) about the active role that the Commission will play in staff matters. He mentioned the importance of dealing with staff representatives on a full and realistic Whitley Council basis, so there is no need for me to emphasise the point.
It has been said that it is about 160 years since legislation was passed to deal with these matters. I have no wish to look backwards, but the point that my contemporaries would wish me to make is that we expect Parliament to be more effective. We wish it to be more effective, and we are determined to make it more effective. This will place more demands on our staff, and therefore we welcome this opportunity to see that the correct basis is laid for that expansion and improvement.
It is high time that we were masters in our own house and that we made our own decisions about printing and, indeed, as has been said, about various other matters, including Hansard. I take very much to heart the remarks of the right hon. Member for Bermondsey. If he looks at the evidence submitted by Hansard to the Bottomley Commission—I refer to pages 84 and 85—he will


see that the Editor is reported as saying that he would like to remain under the Speaker's Department. The Speaker's Department is still provided for in the Bill, so I am not entirely clear why it is necessary to proceed as the right hon. Gentleman has suggested to us this morning.
We need to be masters in our own house. This puts responsibilities on us, and particularly on those who are appointed to the Commission. I do not know what weight we should attach to the Liberal representations, or whether it should be counted on a per capita basis, but I note wryly, in passing, that their standard of accommodation is rather more generous than is available to some of the other parties.
I include in the need to be masters in our own house the need to be able to deal with the question of our refreshments, to which reference has already been made.
I believe that the Commission's report has laid the framework, but we have a responsibility to build on it, and in building on it we must ensure that we retain the good will and confidence of those who serve us, who have chosen to serve us, and who wish to be in the service not of the Crown but of the Mother of Parliaments.

11.57 a.m.

Mr. William Price: With the leave of the Committee, I shall endeavour to deal with the questions that were specifically asked of me.
I begin by saying that I very much agree with the right hon. Member for Cambridgeshire (Mr. Pym) when he says that we should leave it to the Commission to take its own decisions. That has been the whole basis upon which the Government have approached the matter, and the evidence this morning is that that is the general wish of members of the Committee.
The right hon. Gentleman referred to the Services Committee. It is true that my right hon. Friend the Member for Middlesbrough (Mr. Bottomley) sees an important role for that Committee, and I think that that would be the wish of this Committee and, indeed, of all hon. Members.
The right hon. Gentleman raised the question of the Refreshment Department. It is not, as we know, a Department of

the House. The employer of catering staff is the Catering Sub-Committee of the Services Committee, and we all know that the Refreshment Department is heavily in debt. If the House decided that a restructuring of authority for House catering was desirable, it would be possible under Clause 4(2) for the Refreshment Department to be made a Department of the House and thus to be brought within the authority of the Commission. But this is a matter for subsequent consideration if it is thought to be necessary, and what is being created is the framework within which that might be done.
I very much agree with the right hon. Gentleman's plea for fair Press coverage of that matter. The latest example came earlier this week as part of the Express group of newspapers' continuing attack upon Members of Parliament. It is only a week ago that the group did a front page lead on the staggering revelation that Members of Parliament cost more than members of the Royal Family. I should not have thought that that was surprising in view of the fact that there are 635 of us, but this is the sort of level at which the Daily Express is conducting its vendetta against Members of this House. I suppose that if anything can be said for the newspaper it is that the attack appears to be directed at both sides.
I find the paper's latest story quite staggering. The headline reads:
You foot bill for Members of Parliament's meals",
and the first paragraph says that a bill for £1 million to meet losses on House of Commons catering is to be picked up by the taxpayer. Towards the end of the story there is one paragraph from the hon. Member for Fareham (Dr. Bennett):
Dr. Bennett added that 3,500 meals a day are served at the Commons but only 100 are in the Members' Dining Room. The rest are for civil servants, typists, police and other staff of the House.

Mr. Mellish: And the Press.

Mr. Price: And the Press. If we could persuade Fleet Street to look at the matter more objectively than it does, we should do the House a service.
The right hon. Gentleman asked about travel expenses for Select Committees. I understand that they will come under the heading of "any other expenses" and


within the scope of the Commission's estimates.
The right hon. Gentleman raised the important matter of pensions of House staff. The provisions of Clause 2(3), apart from the point dealt with in note 4, provide that the House can carry on with its present pension arrangements unaltered. In other words, they continue to apply the provisions of the principal Civil Service pension scheme, as it is from time to time amended, to House of Commons staff. The Bill, nevertheless, embodies the concept of a separate pension scheme for House employees. Whilst the House scheme is, in effect, a principal Civil Service pension scheme, the two are formally separate. This removes any suggestion that House employees are civil servants for this purpose. I find that slightly complicated myself, but if there is any doubt about what is meant I should be only too happy to offer written clarification to anybody who seeks it.
The right hon. Gentleman finally referred to the maintenance and development of parliamentary buildings. Again, at this stage it is intended that the present position of the Secretary of State for the Environment with regard to his responsibility for the maintenance of the fabric and upkeep of parliamentary buildings should not be altered. But I accept the fact that the right hon. Gentleman was developing a wider argument about services and facilities generally. I have no doubt that the Commission will consider this issue in due course.
The hon. Member for Rochdale (Mr. Smith) raised, for the second time, the question of minority representation. I can get into enough trouble without giving him that assurance. I cannot offer a total commitment, but I have no doubt that full account will be taken of the case that he has made out and of the proposal of the Bottomley Committee, and we shall look at his specific recommendation.
I now deal with the matter raised by my right hon. Friend the Member for Bermondsey (Mr. Mellish).

Mr. Mellish: Southwark.

Mr. Price: Southwark or Bermondsey—whichever it is, I would not mind the

seat myself, and I am younger than he is, so I may be in with a chance.
Perhaps I ought to declare an interest. I suspect that I am the only shorthand writer on the Committee. My right hon. Friend said that he had represented his constituency for 30 years. I am not expecting to represent mine for 30 years and I keep my shorthand going. I may well be one of the few Members in the House who sits there recording the speeches of hon. and right hon. Members as they take place. I have my own personal "Hansard", and it is just possible that one day I shall be seeking a job upstairs. Therefore, in that sense I had better be careful that any commitment that I offer is a personal one rather than on behalf of the Government.
But I am sure that there would be widespread sympathy for the case put by my right hon. Friend. Certainly the Government would not object in any way if it were decided by the Commission, by the House or whoever it may be that Hansard should be a separate Department. We all have the greatest admiration for Hansard. I say quite seriously, as one who is a shorthand writer, that I am astonished at the job Hansard does. It is the most remarkable service that I have come across. If that is decided, the Government would not object. But we are saying that there is all the scope that could possibly be required within the Bill for that to happen if required.
The hon. Member for Honiton (Mr. Emery) asked about the basic structure. The Bottomley Report said that there should be four Departments—the Clerk's, the Serjeant at Arms', the Library and Administration. As things stand, it envisages that Hansard would go to the Clerk's Department and that the Vote Office would go to the Library. Also, as things stand at present, Mr. Speaker will have a department of his own, but it is expected that the Commission will reduce it to his own small staff of 12 or so people. But, again, that is a matter for further consideration. I can only tell the Committee what we think might be the possibilities.
The hon. Member for Honiton (Mr. Emery) referred to the printing of papers. The Commission could consider taking over its own printing in due course. That


matter is covered in paragraph 4.12 of the Bottomley Report, which states:
The Commission's overall responsibility for the Estimates of the House would provide a valuable annual framework for reviewing the future needs and consequential development of the services of the House
I believe that that covers the point raised by the hon. Gentleman.
It has been an extremely agreeable morning, which does not always happen when dealing with matters concerning the office of the Leader of the House. I am

grateful for the support that there has been for the Bill, and perhaps I ought to leave it there.

Question put and agreed to.

Ordered,
That the Chairman do now report to the House that the Committee recommend that the House of Commons (Administration) Bill ought to be read a Second time.

Committee rose at twenty-nine minutes Twelve o'clock.

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:


Jones, Mr. Arthur (Chairman)
Irving, Mr. Sydney


Berry, Mr.
Mellish, Mr.


Bottomley, Mr Arthur
Miller, Mr. Hal


Coleman, Mr.
More, Mr. Jasper


Cooke, Mr. Robert
Price, Mr. William


Emery, Mr.
Pym, Mr.


Forrester, Mr.
Smith, Mr. Cyril


Hawkins, Mr.
Whitlock, Mr.

Orders of the Day — Second Reading Committee

Wednesday 12th April 1978

The Committee consisted of the following Members:


Mr. Arthur Blenkinsop (in the Chair)


Bates, Mr. Alf (Bebington and Ellesmere Port)
Lawrence, Mr. Ivan (Burton)



Lyons, Mr. Edward (Bradford, West)


Boothroyd, Miss Betty (West Bromwich, West)
Richardson, Miss Jo (Barking)



Sandelson, Mr. Neville (Hayes and Harlington)


Bottomley, Mr. Peter (Woolwich, West)



Bowden, Mr. Andrew (Brighton, Kemptown)




Sims, Mr. Roger (Chislehurst)


Clegg, Mr. Walter (North Fylde)
Stradling Thomas, Mr. John (Monmouth)


Hayman, Mrs. Helene (Welwyn and Hatfield)
Summerskill, Dr. Shirley (Under-Secretary of State for the Home Department)


Hooson, Mr. Emlyn (Montgomery)
Watkinson, Mr. John (Gloucestershire, West)


Hunt, Mr. David (Wirral)

Orders of the Day — DOMESTIC PROCEEDINGS AND MAGISTRATES' COURTS BILL [Lords]

10.30 a.m.

The Under-Secretary of State for the Home Department (Dr. Shirley Summer-skill): I beg to move,
That the Chairman do now report to the House that the Committee recommend that the Domestic Proceedings and Magistrates' Courts Bill [Lords] ought to be read a Second time.
The main purpose of the Bill is to reform the law relating to matrimonial proceedings in magistrates' courts, and to bring it into line with the matrimonial law of the higher courts.
There are two separate but overlapping matrimonial jurisdictions. One is in the magistrates' courts. This jurisdiction operates at a stage while a marriage is still in existence, before it has broken down irretrievably. The other is operated in the High Court and divorce county courts. These courts may grant decrees of divorce, nullity and separation.
There are considerable differences in the law applied in the two jurisdictions which, in effect, place the applicant to the magistrates' court at a disadvantage. The differences were criticised by the Finer Committee in its Report on One-Parent Families. The Bill removes them.
The present situation has arisen because the reforms made in divorce law in 1969 and 1970 were not carried through into the matrimonial law administered by the magistrates' courts. Whereas a divorce may now be obtained if the respondent has behaved in such a way that the petitioner cannot reasonably be expected to live with him or her, a person applying to a magistrates' court for a maintenance order because of the unreasonable conduct of the other party to the marriage has to establish that the other party is guilty of one or more of a number of listed matrimonial offences, such as persistent cruelty, adultery or being a


habitual drunkard or drug addict. The Bill now brings magistrates' courts matrimonial law into line with divorce law by substituting a reference to unreasonable conduct for this list of matrimonial offences.
There are two other grounds in the Bill for making an order. The first of these is desertion, which is also a ground in existing magistrates' matrimonial law, and, if it lasts two or more years, for a divorce. The second is failure to provide reasonable maintenance for the applicant. In existing law it is necessary to show that a failure to provide reasonable maintenance is due to wilful neglect.
I hope that the Committee will bear with me while I outline the Bill and mention the new provisions. It is a very long Bill but the new provisions can, I hope, be summed up fairly quickly.
Part I provides a new code for matrimonial proceedings in magistrates' courts. This is in place of the existing law embodied in the Matrimonial Proceedings (Magistrates' Courts) Act 1960, which the Bill repeals. The new matrimonial code in Part I is in most respects consistent with the provisions of the reformed divorce law provided by the Matrimonial Causes Act 1973. There are some differences, because the magistrates' jurisdiction operates at a stage before a marriage has broken down, so that its objectives and those of the divorce law are not and cannot be consistent in all respects. But wherever possible the Bill provides consistency.
Parts II and III of the Bill carry through the reforms of magistrates' matrimonial law made in Part I into other similar legislation and so provide consistency between these proceedings as well. Part III also contains some new provisions concerning the international enforcement of maintenance. Part IV contains procedural provisions. Some of these also are new.
With regard to the new provisions, Clause 1 provides new grounds for seeking a magistrates' matrimonial order in place of the present list of matrimonial offences. The new grounds are: first, failure to provide reasonable maintenance for the applicant; second, failure to provide reasonable maintenance for a child; third, behaviour such that the applicant

cannot reasonably be expected to live with the respondent; and fourth, desertion.
Clause 2 gives the magistrates' court a new power to order a lump sum payment not exceeding £500 in matrimonial proceedings in addition to the existing power to order maintenance.
Clause 3 provides statutory guidelines for the matters which the court is to take into account in deciding whether to order financial provision. This clause replaces the provisions in present law under which an applicant to a magistrates' court who has committed adultery is barred from receiving maintenance and provides instead that, as in divorce law, the court should take the parties' conduct into account only to the extent which it is just to do so.
Clause 6 introduces a new accelerated procedure for obtaining a magistrates' order where the parties are in agreement about financial provision.
Clause 7 empowers the magistrates' court to make an order for the custody of a child until he attains the age of 18, instead of the present limit of 16, and so brings magistrates' courts into line with the higher courts in this respect. The clause also empowers the magistrates' court to make a joint order under which one party to the marriage is given legal custody of the child but the other party is allowed to retain some or all of his parental rights except for the right to the actual custody of the child.
Clause 12 provides a means by which people holding parental rights and duties jointly and who disagree may apply to the court for an order resolving the issue in dispute.
Clause 13, which was added in another place, makes clear that in any proceedings under the Bill where the custody of a child is in issue, the welfare of the child is the first and paramount consideration.
Clauses 14 and 15 provide the new powers for magistrates to make personal protection and domestic exclusion orders and to issue a warrant of arrest for breach of such an order.
Clause 30 gives the magistrates' court a new power, where it makes a custody order in matrimonial proceedings, to direct that the child shall not be removed


from England and Wales. This corresponds with the power already available to the higher courts.
Part III also contains new provisions relating to international enforcement of maintenance. Clause 49 enables courts in the United Kingdom, where they are enforcing an order made by a court in a Commonwealth country under the arrangements for reciprocal enforcement, to give effect to the intentions of the Commonwealth court as regards the date from which the order is to have effect.
Clause 53 extends the arrangements for intentional enforcement provided by Part II of the Maintenance Orders (Reciprocal Enforcement) Act 1972 so as to include maintenance payable to a former spouse. At present, these arrangements apply only where the parties are still married. The clause will enable the United Kingdom to give full effect to international obligations under a United Nations convention on the recovery abroad of maintenance.
Clause 56 enables free legal aid and advice to be made available to certain overseas applicants seeking maintenance in Scotland.
Part IV contains procedural provisions. Clause 70 alters the basis of jurisdiction in civil proceedings in magistrates' courts from the petty sessions area to the county.
Clause 73 increases the penalties for disobeying magistrates' orders other than for payment of money. Such orders will include the new personal protection and domestic exclusion orders provided by the Bill.
Clause 74 introduces a new comprehensive definition of the various proceedings—matrimonial, guardianship, affiliation, custodianship and adoption proceedings—which fall within the general definition of "domestic proceedings." This replaces the provisions at present scattered in a number of different enactments.
Clause 75 is an important new provision which requires that proceedings defined as domestic proceedings shall in future be heard only by magistrates who are members of a domestic court panel, which is to be specially appointed for this purpose. The setting up of a domestic court panel, on lines similar to the panels which already exist for hearing juvenile proceedings, will make it possible to

appoint for cases of this type justices who are well suited to the work and wish to do it. It will also be possible to provide them with a specialist programme of training, and, through hearing domestic cases frequently, they will have the opportunity to build up considerable expertise.
Clause 76 amends the law relating to the persons who may be present during the hearing of domestic proceedings. It brings these provisions into line with the corresponding provisions for juvenile proceedings by limiting the persons who may be present to those directly concerned in the case, the Press and any person whom the court considers has reasonable grounds for attendance.
I shall now mention one important and topical provision in the Bill—protection for battered wives and children. The Bill creates important new powers for the protection of battered wives and children. It enables magistrates' courts to make two new types of order in cases where there is a danger of violence to one of the parties to the marriage or to the children. The court will be able to make a personal protection order, which will prohibit the other party to the marriage from using or threatening violence, and a domestic exclusion order, which is an order excluding the other party from the matrimonial home. These provisions give magistrates powers similar to the powers already available to the higher courts to grant injunctions. For the first time, they provide a summary means of obtaining relief in these cases. The provisions implement the recommendation made by the Select Committee on Violence in Marriage.
The Bill as it stands enables a magistrates' court to evict a violent party but does not enable a magistrates' court to make an order requiring the violent party to permit the other party to enter and remain in the matrimonial home.
The Law Commission in its report did not recommend giving magistrates such a power. During the debate in another place, the Government were asked to look at the matter again. It was pointed out that such a power was available to the county courts under the Domestic Violence and Matrimonial Proceedings Act 1976, and if such a power were not provided in the Bill a violent party who was excluded from the matrimonial home would be able to


change the locks and prevent the other party from occupying the house.
The Government undertook to consider the matter further in consultation with the Chairman of the Law Commission. That we have done. The Law Commission has indicated that it would favour an extension in the provisions of the Bill to enable a court, where it makes a domestic exclusion order, to make a further order against the excluded party requiring him to permit the other party to enter and remain in the matrimonial home. Amendments to this effect will be put down by the Government in Committee.
A further matter discussed in another place was whether there should be an express provision in the Bill to make clear that a magistrate's domestic exclusion order did not affect the property rights of the parties. For example, if a man was sole owner of the matrimonial home and was excluded from it, the magistrate's order could not resolve property rights, which might also affect third parties, although it would, of course, prevent him from enjoying the right to occupy so long as it was in force. The Government undertook to consider this further. We now think it desirable, after consultation with the Law Commission, to make an express provision on this point. An amendment will now be put down in Committee.
The Government spokesman also mentioned in the other place that it might be necessary to make a corresponding amendment in the Domestic Violence and Matrimonial Proceedings Act 1976. That is not now necessary because of the recent judgment in the case of Davis v. Johnson in which the House of Lords made clear that an injunction granted under that Act does not affect the parties' property rights.
This is an extremely important Bill which reforms family law in magistrates' courts. This has in recent years been a neglected area of law yet it affects the lives of very many people. The provisions in the Bill implement recommendations made by the Law Commission, which carried out a thorough study of the subject and consulted widely before formulating its proposals. The Bill has been welcomed by the legal profession, social service bodies and other groups.

Its proposals are to a large extent, I hope, non-controversial.
There have been some criticisms that the Bill does not go far enough, but they have to be set against what the Bill actually achieves. It will introduce consistency in an area of law which is complex and full of anomalies. It will simplify court proceedings, to the benefit of the public, the courts and legal practitioners. It will make it easier and less distressing for a wife to obtain a maintenance order in a magistrates' court and will give magistrates' new powers to make orders for the protection of wives and children against domestic violence. It also provides for the setting up of specialist domestic panels to hear domestic cases.
No doubt, hon. Members would like to see other provisions and they will be tabling amendments to the Bill, but it already runs to 84 clauses. Some limit has to be set to achieve the right balance between an inadequate Bill and one that is far too heavy.

10.48 a.m.

Mr. Roger Sims: May I, first, on behalf of the Committee thank the hon. Lady for the very clear manner in which she has guided us through an extremely long and complex Bill.
Perhaps I might also take this opportunity to express our thanks for the courtesy extended by the Home Office in ensuring that all members of the Committee have a copy of the explanatory memorandum. For those of us who do not have the advantage of official advisers and who are laymen rather than lawyers, the more guidance we can have in these very complex matters, the better.
It is a common criticism of legislation in this House that it has been hastily prepared and ill-considered. However justified that criticism may be of a lot of legislation, it certainly cannot be made about this Bill.
As the Committee knows, the Bill stems orginally from a paper drawn up by a working party of the Law Commission which was circulated to a wide range of interested bodies who made their representations. Those, in turn, were most carefully considered by the Law Commission which produced its Report No. 77, with which the Committee will be familiar. It might be appropriate at this


stage to record our thanks to the members of the Law Commission for their hard work in preparing the Bill.
Since the Bill was drafted, it has passed through another place where it has been revised, but despite the fact that it has gone through this very long process some Opposition Members feel that it may well be capable of yet further improvement.
Many of us would have liked to have had a Bill setting up family courts. This has been the subject of discussion, literature, reports and articles for many years. Everybody seems to think it is a pretty good idea, but we never actually get there. But at any rate, this is a step in the right direction. When we finally reach the stage of having family courts, I think it more likely that rather than a completely new court structure emerging, the family courts will be grafted on to our existing structure, probably rather more on the county courts side than on the magistrates' courts side. However, this Bill is a step towards removing some of the differences and anomalies between the various procedures and bringing into line to some degree not only matrimonial matters but guardianship and affiliation proceedings under the Children and Young Persons Acts, and so on.
It is important to emphasise that we are dealing here with the domestic courts. These are quite distinct from the other activities of magistrates' courts, especially in the criminal sphere. To that extent, they are rather more similar to the work in this area of the county court. It is unfortunate that so often domestic proceedings in magistrates' courts appear to be involved, by implication if not physically, with the criminal work of the magistrates' courts. Fortunately, most magistrates' courts try to hold separate sittings for their domestic proceedings, but it is not always done. Usually the proceedings are held in exactly the same court room as criminal proceedings, and this is all rather unfortunate in implying a similarity between the two, which does not and should not exist.
Some courts make a point of trying specifically to hold their domestic proceedings in different surroundings. Because, alas, the Home Office has not found it possible to provide sufficient funds for adequate court facilities, my own court has had to use a nearby church hall. It makes a point of using that church hall

specifically for domestic proceedings, so that these are physically separate from the criminal proceedings of the magistrates' court.
Perhaps I might briefly run through some of the main clauses to which the hon. Lady referred. Clause 1 is certainly valuable in removing the idea of the matrimonial offence from these proceedings. Some people feel that some of the elements in the Bill still retain the idea of a matrimonial offence. This is a matter which, I think, we can discuss further in Committee. I felt that the Law Commission put the arguments very well and, as the hon. Lady indicated, we are discussing here the early stages of a breakdown, or apparent breakdown, of a marriage and not the divorce proceedings where, perhaps, a rather wider range of grounds for the separation could exist.
Clause 1 also refers to "child of the family". This is a phrase which is being increasingly used in legislation of this type, rather than the older expression, "child of the marriage". This has certain implications. For example, if a woman brings to a marriage a child by a previous liaison and the husband simply treats that child as a step-son or step-daughter, that child become a child of the family, although it is clearly not a child of the marriage. If that child then becomes the subject of, say, care proceedings because there is, perhaps, a question of ill treatment, or possibly because the child has passed through the juvenile court and committed some offence, and the child is sent to a community home, the local authority has the power to require the parent to make some sort of contribution by way of maintenance. But only the parent—in the instance that I have given, the mother of the child. The stepfather is in no way responsible.
However, if the couple are separated under the 1960 Act, the stepfather can be made to pay maintenance. Indeed, he can be made to pay maintenance to whomsoever the court specifies. It could even be that maintenance would be paid to a man with whom the wife had now chosen to live. Indeed, in the extreme case she might have chosen to live with her original lover—the natural parent of the child—with the stepfather being required to pay maintenance.
It is a curious anomaly that if in a marriage such as I have described the wife


were to die, the stepfather would be under no legal obligation to that child. But if the marriage dies, the stepfather is under a legal obligation. The concept "child of the family" affects not only step-parents but private foster parents and custodians under the Children Act. By bringing it into the Bill, we are perpetuating this problem, which we ought to discuss in detail in Committee. I shall not pursue it further now, but we ought to look at it rather more closely.
Clause 3 refers to the criteria that the court should adopt in deciding the amount of maintenance. Reference is there made, among the criteria, to the means of the parties to the marriage. Here I hope that in Committee we may consider the situation where, although a second wife is not considered party to the first marriage, her means are in effect taken into account when maintenance is decided. I am sure that members of the Committee have had experience in their constituencies of cases in which the wife of a second marriage goes out to work and her income is taken into account as part of the income of the household in deciding how much the husband can reasonably pay for maintenance of the children of his previous marriage. In some cases, the women simply say "Why should I work to pay for the children of my husband's first marriage?" There are various implications of such a situation, but I suggest that we ought to look at it.
Clause 12 is very interesting in giving the opportunity for parties to come to court to settle disputes. However, it may be desirable to try to define what is meant a little more closely, because one can see the court's time being wasted on relatively trifling matters. We all know that, when there are separations, quite small differences of opinion loom large in the eyes of the parties, but it does not seem desirable that a good deal of court time should be spent in dealing with such relatively trivial matters. It may be worth our while in Committee trying to improve the wording to get over that difficulty.
I turn to Clause 14. If I omit clauses, it is clearly because I intend not to go through every one of them, but only to headline matters that I think merit particular consideration. Clause 14 is important in that it introduces the idea—the expressions are not, I believe, used

in the Bill, but they were used in the Law Commission's Report—of the protection order and the exclusion order.
As the Bill stands, there is an absence of any power to require one party to be allowed to enter and remain in the property from which he or she has been excluded by the other. This gives rise to the question of property rights to which the hon. Lady referred. I am glad that this matter has been considered, and that amendments will be tabled.
We ought also to introduce a means of ensuring that one party has the right to occupy or, vice versa, to demand exclusion of the other party from, part of the property rather than the whole of the property, particularly where one party of the marriage has a bedsitter within the house or something of that sort. I believe that that is not at present covered.
Jumping now to Clause 72, this introduces a concept to which the Law Commission did not refer, namely the idea of domestic court panels—along the lines, as the hon. Lady said, of juvenile court panels. I imagine that the Home Office will receive, as I have, quite strong representations both for and against this idea. One can argue as the Minister did, that there is a case for some magistrates specialising in this subject, having training, sitting regularly and handling such cases on a fairly frequent basis, on the same lines as a juvenile panel.
On the other hand, there is the argument that magistrates as a whole should not be excluded, as about two-thirds of them would be, from handling this important type of work for which they are well suited. No doubt, we shall argue the matter in more detail later, but I hope that we shall be told how these panels are to be appointed—"appointed" is the word used in the Bill—whereas juvenile panels, with the exception of Inner London, are not appointed but are elected by the benches from their own number.
My reading of the remarks made by a spokesman in another place is that it is the intention that domestic panels shall be elected by benches from their own number. But the Bill does not say that, and I think that it should do so, for the sake of clarity. I appreciate, however, that at the end of the line it may be necessary to have some sort of


power in the Lord Chancellor's hands to grant or withhold the blessing of the selections made by the local benches.
Clause 74 defines "domestic proceedings". In Clauses 17 and 18, powers are given to magistrates' courts not only to make maintenance and custody orders but also to vary or enforce such orders. But it appears from my reading of Clause 74(1A) that a court only may define variation matters as domestic proceedings. The word is "may"; the court is not obliged to do so. In other words, whereas a domestic court would deal with the initial order of maintenance or custody—maintenance in particular, of course—a variation or enforcement order only may be dealt with by the domestic court. It could be dealt with by the ordinary magistrates' court. Surely, if the initial proceedings take place in the domestic court, any enforcement or variation should also be confined to the domestic court.
Clause 75 details the constitution of these domestic courts. I am not entirely clear about the status of stipendiary magistrates in this context. It appears that a stipendiary magistrate has the powers of a two or three lay justice domestic court, but reference is made to the stipendiaries being members of the domestic panel. It should be made clear exactly how they become members of a domestic panel.
So much for what is in the Bill.

Mr. Andrew Bowden: Will my hon. Friend comment on Clause 76, which restricts the categories of persons who may be present during the hearings of domestic proceedings? I should be grateful if he would give the Committee his advice and guidance on something that seems to me rather illogical. The clause proposes that we allow the Press and Press agencies to be present at these hearings, but not members of the public. What is my hon. Friend's view on that proposal?

Mr. Sims: Simply that that brings these proceedings into line with the general practice in juvenile courts. It is not for me to make the case for the thinking behind the clause, but my understanding is that the underlying argument is that it is right that these proceedings should not be completely in camera, and therefore the Press has access, although the Press cannot quote names or give any information

which identifies the people involved, unless the court specifically so rules. On the other hand, clearly it is undesirable that the general public should be present at such proceedings. In my view it is perfectly logical for the same rule to apply to the domestic courts as apply at present to juvenile courts.

Mr. Edward Lyons: Arising out of that observation, I put this point to the hon. Gentleman. When maintenance is argued in chambers in the High Court, the Press, to my knowledge, is not permitted entry. At least, I have never seen it happen, and I should be surprised if it were permitted.
We are not always talking about children in domestic proceedings. One is often dealing with a husband and wife who are childless or whose children have grown up and are now adult. It seems rather strange that under the Bill the Press may attend maintenance proceedings in the magistrates' court but will not be able to attend in chambers in the High Court. If I am right about that, then, as a spot reaction, I find it anomalous.

Mr. Sims: Yes, I think that the hon. and learned Gentleman is right. Again, this is something we could look at more closely in Committee although, as the hon. Lady indicated, it is not the intention here to bring the magistrates' courts and the higher courts completely into line obviously, that would not be practicable. There may well be a case for excluding the Press altogether, although, clearly, there are arguments against that at this level.
One of the issues which the Law Commission considered and on which it made a recommendation was that there was a strong case for the production of informal, if not formal, documents between the parties before a hearing, as is done in the divorce courts—the production of what I think are known in the legal profession as pleadings. The Law Commission recommended this course and a number of outside bodies strongly support it. Such a provision does not appear in the Bill. It may well be that the Home Office has it in mind to produce rules to cover such a course rather than include it in the Bill itself. Either in winding up the debate or at some stage in Committee, perhaps the Minister could let us know her thoughts on that.
Another aspect of procedure on which there are differences is that in the High Court it is not unusual—in fact, it is fairly common—in custody proceedings for the judge to want to see and talk privately to the child or children. This is done also in county courts from time to time. However, not only is it not done in custody proceedings in the magistrates' courts but Sir George Baker, the President of the Family Division, and the Lord Chancellor himself have both specifically said that it should not be done.
If we are seeking generally to bring into line the procedures of the various jurisdictions, I think that there is a case for bringing these matters into line and for giving the domestic courts the opportunity, if they feel it appropriate, to have a chat with the child or children over which there is dispute in a quiet room, aside from the relative formality of the court itself.
The Law Commission also made some interesting observations on the use of what it described as application courts, that is to say, a sort of preliminary hearing of separation and maintenance proceedings. In some courts the idea of an application court is fairly strongly formalised. I wonder whether it is the Government's intention to bring in this idea as part of the general procedure, because, again, it seems illogical that this should be done in some jurisdictions and not in others. I should have thought that there was a case for, at any rate informally if not formally, setting up such an application court procedure. This could be incorporated in the Bill, or perhaps the Minister could indicate whether there was any intention to issue rules about it.
A notable omission, to which the hon. Lady has not referred, is that there is no power anywhere in the Bill for anyone other than the parties involved to bring proceedings, for maintenance in particular. There appears to be no power whatsoever for the court itself to bring proceedings to require enforcement or to bring variation proceedings; nor is there any power—this is particularly important—for the Supplementary Benefits Commission to do so. Surely, there is a strong case for enabling the Supplementary

Benefits Commission to initiate proceedings in domestic courts.
We are all familiar, I imagine, with the case of the woman not receiving maintenance who is being maintained by the Supplementary Benefits Commission—in other words, the taxpayer. In those circumstances, there is obviously no incentive for her to take proceedings against the erring husband.
The Finer Report suggested that the answer to that was that the Supplementary Benefits Commission should handle such proceedings. Whereas we do not go as far as Finer, I think that there should be something written into the Bill to give the power to the SBC, and particularly in the case of enforcement, to the court itself to initiate proceedings.
These are a few points, and I suspect that there are many others that hon. Members will wish to bring up in Committee. While, obviously, we hope that we can improve certain aspects of the Bill, we on this side have no wish whatsoever to obstruct its progress. I wonder whether the Minister could share with us her thoughts on when she expects that it will be possible to implement this legislation. It ties up to some extent with the Children Act which was passed two years ago, parts of which are still not implemented. If she could give us some idea of the timetable for bringing in the other provisions of the Children Act and of implementing this Bill, I am sure that it would be of interest to the Committee and to others outside.
I hope that the Bill can pass fairly swiftly through the House, when we have had a chance of looking at it more closely, and that it will prove to be a positive step towards the formation of family courts.

The Chairman: I remind the Committee that this is a Second Reading Commitee and there is no automatic right to second speeches.

11.12 a.m.

Mr. Emlyn Hooson: This is a highly desirable Bill and I welcome it. My chief purpose at this stage is to raise two important points on which I have serious doubts. I am, in effect, giving prior notice of matters which I think should attract close attention in Committee.
I draw attention, first, to Clause 7(2)(b) dealing with the powers of the court regarding
the right of access to any such child… as the court thinks fit".
I doubt whether there should exist such a right of access. I say that because I think that the importation of the words "the right of" presages a great deal of difficulty of interpretation in the magistrates' courts.
In the Family Division the judges have been moving away from the concept of the right of access by parents. I quote the case of M v. M, reported in 1973, 2 All England Law Reports, at page 81. The headnote states:
Access to be regarded as a right of child rather than parent.
I quote the decision from the headnote which, I think, should attract the attention of the Committee:
No court should deprive a child of access to either parent unless it was wholly satisfied that it was in the interests of that child that access should cease, and that was a conclusion at which the court should be extremely slow to arrive. Access was to be regarded as a basic right of the child rather than a basic right of the parent. Save in exceptional circumtances to deprive a parent of access was to deprive a child of an important contribution to his emotional and material growing up in the long term. There was no distinction to be drawn between a natural parent and an adoptive one.
That was a decision of a Family Division court with three very experienced Family Court judges—Mr. Justice Wrangham, Mr. Justice Latey and Mr. Justice Dunn—and as I understand that it is the approach followed by Family Court judges thereafter.
It seems to me that the Bill would lose nothing if the words "the right of" were excluded and the court could consider making orders regarding access to any such child as the court thought fit. If the words "the right of" are left in, I can imagine an eloquent and persuasive advocate such as the hon. Member for Burton (Mr. Lawrence) being able to persuade a court that Parliament had provided and spelled out that parents had the right of access. I should like the Minister to consult the President and judges of the Family Division about whether they would regard it as desirable that those words should be left in.

The Chairman: May I call the hon. and learned Gentleman's attention to the

fact that that is more a Committee issue, and we are taking Second Reading in this Second Reading Committee.

Mr. Hooson: Yes, Mr. Blenkinsop, but I wished, as I think I said, to give prior notice of the point, which is vastly important. I know that the same view is taken in other quarters. I was, therefore, hoping to give the Minister an opportunity of considering it before the Committee stage.
The second matter I wish to raise arises from Clause 7(4) and Clause 32(1), which purport to give to non-custodial parents certain rights and duties and which virtually invite split orders. If there is one thing that the Family Division has tried to avoid in recent years it is split orders—that is, legal custody given to one parent and all kinds of rights given to another so that there is a continuous clash between parents as to who is to exercise parental control.
The view the courts have taken is that it is more in the interests of the child, however traumatic an experience it may be for the, as it were, unsuccessful parent competing for custody, that split orders should be avoided.
I invite the Minister to consider whether those two provisions positively invite split orders. I am told that the Family Division nowadays rarely makes a split order. If statutory provisions are to be made so that magistrates are faced with provisions which virtually invite them to make split orders, that will be going directly against the practice of the Family Division.
I hope that the Government will consider those matters and decide what amendments may be desirable, taking the opportunity to consult the judges of the Family Division to see what their view is. After all, the purpose of the Bill is to remove anomalies between the Family Division and the magistrates' courts. As there are two provisions in the Bill which import greater anomalies than exist today, there should be further thought.
Generally speaking, it is best to get rid of anomalies. But, to echo the hon. Member for Chislehurst (Mr. Sims), when will the Government grasp the nettle and get rid of all the anomalies by setting up family courts? Even if no money is available at present, we should be thinking about it and deciding what form the


family courts should take. For example, the Select Committee on Violence in the Family recommended that the Government should publish a Green Paper so that there could be public debate about what ought to be done about family courts. In fact, the Government were invited to produce a draft Bill in the form of a Green Paper to stimulate argument about it.
There are many different ideas as to what a family court should be and what it should do. But, surely, it would be a wise precaution to be clear in our minds, in Parliament and in the Government, as to the form a family court should take so that, when money becomes more readily available, the reform can be more easily implemented.
In the Bill there are many examples of referential drafting, with amendments to Acts not yet in force. Mention has been made of certain provisions of the Children Act passed in 1975, not yet implemented, but which are amended by the Bill. There is the Adoption Act passed in 1976 and not yet in force, yet the Bill makes certain amendments to that Act.
An overwhelming case for a consolidation measure in this sphere is building up. At present, the law is left in a very untidy state. One has but to imagine the situation created by a 1976 Act, published, carefully studied, but amended before it comes into effect. I am not saying that the amendment is undesirable, but there is a great need for tidying up this area of the law.
The Bill sets up panels for magistrates who are to sit in domestic courts. That is highly desirable but it is even more desirable that they receive proper training for such work. They should be trained in the way that training is made available for juvenile panels.
I query whether it is desirable that a stipendiary magistrate should be allowed to sit alone to decide any of these cases. I do not know why it should be thought that a stipendiary magistrate, normally a member of my profession, is better qualified to decide important questions in this sphere where one has to consider family background and other emotional issues. A stipendiary's training in the law gives him little advantage in considering the best course to take in a domestic court.
Finally, I echo a point already made. There are powers under Clause 14 to deal with domestic violence by making orders excluding violent husbands from property. I understand that, as a result of consultation with the Law Commission, certain amendments are to be considered to that aspect of the Bill. Under the Domestic Violence and Matrimonial Proceedings Act 1976 there are different, and greater, powers for county courts. The orders there apply to co-habitees as well. Would it not be desirable to make sure that the provisions are similar in the magistrates' courts? I do not know what amendments are in mind, but this is an aspect that should be regarded with care.
Altogether, it is a desirable Bill and all we can do is seek to improve it. I echo the sentiments expressed by the hon. Member for Chislehurst, speaking from the Opposition Front Bench, that the sooner we get the Bill in tidy form and passed, the better.

11.24 a.m.

Miss Jo Richardson: I take up immediately what the hon. and learned Member for Montgomery (Mr. Hooson) has said in criticism of the Bill, since the more we study it the more complex and confused it makes the law to the layman—I stress, to the layman. Looking around the Committee, I see a number of distinguished legal gentlemen and I find myself in, I think, a minority of about four or five who have not had legal training. I see the hon. Member for Woolwich, West (Mr. Bottomley) nodding. It is not the first time that I have found myself in such a situation on a Bill as complex as this.
I echo the remarks of the hon. and learned Member for Montgomery in saying that the time has come seriously to consider a consolidation measure which would bring all the various Acts together in a digestible form for the men or women who have to use them. We make the laws, and I sometimes wonder whether we understand them ourselves. If we do not understand them, certainly people outside will not understand them, and they are the ones for whom the laws are designed.
That is why I regret that the Law Commission, in considering this problem, did not take on board the strong recommendation of the Finer Committee that the domestic jurisdiction of the magistrates'


courts should be substituted by a system of family courts.
It is a fact that magistrates' courts are being used less and less by those involved in marriage break-up. No one has any statistical knowledge of why that is, but it is a fact, as the Law Commission pointed out, that magistrates' courts tend to be used as a "casualty clearing station" in terms of break-up of partnerships. That in itself seems to indicate that magistrates' courts in their present form, are not the best places to deal with them, and, in a way, we are re-institutionalising them in the Bill.
The Finer Committee recommended family courts a long time ago, but the matter has been inadequately debated in the Chamber although the concept of such courts has caught on outside the House. Those who consider themselves to be experts and are involved in these matters outside the House of Commons have supported the idea of family courts.
This was a golden opportunity for the Law Commission and the House to take a close look at the matter and see how we could institute a family court procedure. Such courts would be of much more general benefit to persons making applications than the present system, which was evolved by one Act being built upon another—in many cases one Act not being consistent with another and therefore capable of misinterpretation.
Having made those general remarks, I shall refer briefly to two or three of the proposals in the Bill. I am very disappointed, as are many people outside the House, that Clause 1 provides that desertion and unreasonable behaviour should be considered as grounds for financial provision. That seems to ignore the fact that there are a lot of couples in this country who are living apart. I believe that their needs and problems should be taken into account. To restrict the grounds for an application for an order to
has failed to provide reasonable maintenance for the applicant; or… to provide, or to make a proper contribution towards, reasonable maintenance for any child of the family; or… has behaved in such a way that the applicant cannot reasonably be expected to live with the respondent; or…has deserted the applicant
ignores a whole group of people who are living apart anyway but whose needs in

terms of financial arrangements should be regulated and helped by a court. I have some serious worries about Clause 1 in that respect, and perhaps we may return to them in Committee.
The second matter that I wish to raise relates to the assessment and maintenance clauses, of which there are several scattered throughout the Bill. They are not all together. Again, this seems to be the wrong way of approaching the question of maintenance. I fully support the suggestions that have been made from the Conservative side of the Committee that this should be a matter in which the Supplementary Benefits Commission should be involved. It has vast experience of assessing the needs of individuals in a marriage on this basis. I believe that we ought to apply the national scales of supplementary benefits without regard to conduct. The detail into which this Bill goes places far too much responsibility on lay magistrates to decide how to calculate the maintenance. I believe that the scales of maintenance ought to be left to those people who do so.
I expect other hon. Members have shared my experience with constituency cases where the social security supplementary benefit people are at variance with maintenance orders which have been assessed, and who believe that the assessment is an over-assessment or an under-assessment. This is an opportunity where we can regulate the whole matter.
Thirdly, I really cannot understand why we continue to allow imprisonment for maintenance defaulters. It seems to me quite ludicrous that the law having failed to force someone to pay his maintenance should then put him in prison. This prevents him from paying his maintenance, and it does not help the family at all. Furthermore, it costs the State a large amount of money. I was amazed to read that there are about 3,000 people at present languishing in gaol because they have not complied with maintenance orders. As I understand it—perhaps the Minister will confirm this—to keen a man in prison costs about £100 a week. This seems to me to be a ludicrous way of trying to get maintenance for the person who is claiming it. I think we should seriously consider in Committee the possibility of abolishing Clause 28 which leaves in the imprisonment.
Finally, I come to the problem of battered people and Clause 14. Opposition Members have already referred to this, and I welcome what the Minister said about the amendments which are to be put down. These will go some way at least towards trying to overcome some of the worries that I have about this clause.
My principal worry is that we are introducing yet another procedure for dealing with domestic violence. Under the Domestic Violence and Matrimonial Proceedings Act, we have the possibility of obtaining injunctions through the county court or the High Court. We already see injunctions granted under the Matrimonial Homes Act in the county court. Now we are introducing—and I am not being unwelcoming about this—a further procedure in the magistrates' courts. I am not unwelcoming about including the magistrates' courts. But why cannot we have all three procedures similar? I have had some experience with this under the Domestic Violence and Matrimonial Proceedings Act. Why cannot the draftsman look up similar Acts and try to follow the same principle?
Here we have, in Clause 14 of the Domestic Proceedings and Magistrates' Courts Bill, a whole set of new words to describe the kind of situations in which an order may be made. Hon. Members will know that there has been considerable difficulty with the interpretation of the Domestic Violence and Matrimonial Proceedings Act. I should have thought it a good idea to take that lesson on board and to have copied the wording of one Act into this Bill, so making the procedures in magistrates' courts and in county courts as nearly identical as possible.
Even the definition of violence is different in the two Acts. In the Domestic Violence and Matrimonial Proceedings Act, we talk about molestation, and in Clause 14 of the Bill we talk about using, or threatening to use, violence. I dare say—hon. Members who have legal qualifications will doubtless be able to inform me—there may be slightly different interpretations of those two phrases.
Furthermore, there is no provision in Clause14—and I assure the Committee that I am not trying to pre-empt proceedings in the Standing Committee that will

follow—for a power of arrest as exists under the Domestic Violence and Matrimonial Proceedings Act. The very threat of arrest is already being very helpful in respect of those who have applied for orders under that Act.
I realise that magistrates' courts have the power, anyway, to commit a defendant to custody to enforce an order, but I think that it would be better—and I may put down an amendment to achieve this in Committee if I am selected to serve on it—to spell the matter out in Clause 14.
The other thing that worries me, too, is that, in a county court, the person who is battering is entitled to know the allegations against him or her. In a magistrates' court, as I understand it, there will be no opportunity for the allegations to be spelled out and to be made known to the accused. I may be wrong about this, but that is what I am informed.
Here again, I want to be absolutely even-handed. My principal desire is to protect people who have suffered some kind of violence in the home. At the same time, I believe that those who are accused of committing it should have the right to know what they are accused of. If, under the Bill, they do not know, we must find some way of putting that right so that it will conform to the rights that people have in county courts.
All in all, I would much have preferred—as would a large body of opinion outside this place—to have had a proper family court concept before this committee, instead of this very large and complex Bill. All we can do is try to improve it as much as possible and to press on in other directions for the institution of family courts, the thought of which should not be lost.

11.39 a.m.

Mr. Walter Clegg: I congratulate the hon. Member for Barking (Miss Richardson). She underestimates herself when she says that she does not understand these matters. I had the enjoyable experience of sitting with her on the Committee which considered the Criminal Law Bill, and she understood that well enough and made many sensible speeches on it. I am not sure that her Whip always appreciated the length of time that she took, but that is a different matter.
Some of the matters raised this morning by the hon. Lady and other members of


the Committee are very important for our consideration of the Bill in Committee. I had better declare an interest as a solicitor whose firm still practices in the domestic courts and who, before I came here, thought it a poor week when I did not have at least three hours in court.
With my experience of these matters, I can say that it will make life easier for magistrates in coming to decisions about whether to grant maintenance. Indeed, the Explanatory Memorandum sets out some of the financial savings expected under the Bill, saying:
…there will be offsetting savings from the changes in the grounds on which a matrimonial order may be made and from procedural changes, which should reduce the number of contested cases and also expedite proceedings.
I suppose that it was inevitable that the magistrates' court should, in due time, follow the general law that is operated by the High Court and the county court. Indeed, I am surprised that that has taken so long to happen. However, we should take a little care. I am by no means certain that we have achieved the object of those people who supported so vehemently the Divorce Reform Bill, claiming that by passing that legislation we should be adding to the sum of human happiness. Certainly, it is easier for families to split up now than it was before.
Under this Bill, too, it will now be easier for families to split up than it was before. Whether that is a good thing all round is a matter of doubt. I have found from my own experience in matrimonial courts that if divorce is made easier, separation takes place and that is the end of the marriage, whereas when divorce was somewhat more difficult, marriages went through very sticky patches but survived.
So we should not over-congratulate ourselves when we say that this Bill will make it easier for marriages to come to an end effectively—if not through divorce, then through these new provisions.
I want to take up one point made by the hon. and learned Member for Montgomery (Mr. Hooson) about stipendiary magistrates. He asked why they should sit on their own, because they are lawyers, and magistrates are probably better trained to deal with these matters than they are. But if that applies to stipendiaries, why does the same argument not apply to High Court judges and county

court judges? I should have thought that by the time they come to the Bench they have no more and no less experience than the stipendiary magistrate has. A stipendiary magistrate is probably a barrister who has spent a lot of his time in matrimonial courts. So I do not agree with the hon. and learned Member on that point.
However, I agree with the hon. and learned Member and with several other hon. Members who spoke about having a separate system of family courts. Only too often in a magistrates' court—or, as it is more commonly called, the police court—one finds in the waiting room the witnesses and parties to the action together with various assorted thugs, prostitutes and others who are coming up before the criminal court. That is not the right atmosphere for these matters. I add my plea that, when money becomes available, we should consider the creation of a separate system completely away from the criminal side of the magistrates' courts.
There are many matters that we shall have to watch closely during the passage of the Bill. I agree with the hon. Lady the Under-Secretary of State that we shall have to be careful on the protection and exclusion orders. We have to ensure that both sides get a fair chance. But I welcome Clause 14 and the proposed amendments that the hon. Lady mentioned, because one of the great problems for those acting in matrimonial cases arises when a woman, especially one with several children, cannot leave her home to escape the violence because there is nowhere for her to go. In so far as Clause 14 will help to remedy that situation, I welcome it, and I share the general welcome given to it by my hon. Friend and by all hon. Members who have spoken.

11.45 a.m.

Mr. Edward Lyons: I join in the general welcome to the Bill. It was obviously anomalous that there should have been such a difference in grounds between what was appropriate in the High Court on divorce and what was appropriate to obtain maintenance in the lower courts. That is not to say that the Bill does not require and will not get intense scrutiny.
I congratulate my hon. Friend the Member for Barking (Miss Richardson)


on her speech. She is inclined to find lawyers under every bed, but the majority of the Committee are lay, not legal members. That applies to those present this morning. Indeed, it applies even more to the totality of the Committee, including those not present. I often find that any individual lawyer swirls before my hon. Friend's eyes as a figure both gruesome and terrifying.
I do not want to make a Committee speech, but there are one or two matters which I hope the Committee will consider when it gets down to work. First, Clause 2 contains a new power for magistrates to grant a lump sum order up to £500. The High Court has had that power for some time. As I understand the matter, although a maintenance order can be varied from time to time—a person receiving maintenance can come back again and again for variation—a lump sum is once and for all.
If a bunch of lay magistrates decides to give £200 or £300 to a wife, does that mean that in subsequent divorce proceedings in the High Court, she will be barred from receiving any lump sum? If a lump sum awarded in the magistrates' court is to be no bar to obtaining a substantial lump sum on divorce, perhaps that ought to be clarified. It is a point which needs to be looked at. After all, magistrates are here being given power to change the financial relationship to a considerable degree, particularly among poorer people. I hope that it is in no sense final. I do not mean by that that the present system of appeal is not enough of a safeguard.
Reference has properly been made to the question of Press access to domestic proceedings. It has always been my understanding that the personal means of both men and women—what they own, their income, and so on—are matters purely for them. After all, we are supposed to be getting rid of the matrimonial offence. Therefore, where is the offence to interest the Press. Why should a Press man, whether or not he is forbidden to report the matter—and we know that he is forbidden to report it—be entitled to know about private financial arrangements between the parties? The only time that emerges in the divorce court is normally when the maintenance is agreed. Otherwise,

that fact emerges not in the divorce court, but in Chambers. It seems to me that the present system should continue. The Press should not be allowed to know about a man's or a woman's private resources. It has nothing to do with the Press. These are private proceedings. I think that the clause ought to be looked at again.
I deal next with affiliation. At present it is anomalous that affiliation, which is a form of domestic proceeding in substance and reality whatever it may be technically, is dealt with on appeal from the magistrates' court to the Crown Court. I applaud the fact that on appeal from an affiliation decision it is possible to have a complete rehearing somewhere in case the magistrates had got it wrong. I should certainly deplore any alteration in that system which meant that the only way a person could appeal against an affiliation decision was by going on a point of law to a division of the High Court in London, which is relatively inaccessible to most people, is certainly expensive and does not permit a complete rehearing.
I am in favour of a system of appeal against affiliation orders which enables a rehearing to take place. But why should it take place in the Crown Court, which is a criminal court? In my view, it should take place in the local county court where the judge, who used to be called a county court judge, deals with matrimonial matters. Let the rehearing be in front of him in that court, not in the Crown Court where there is a succession of criminal appeals into which an affiliation appeal may suddenly be interposed. That would seem to me to be anomalous and totally in the wrong venue.
This Bill represents a collection of Committee points. No one will say that it should be rejected out of hand. That is no doubt why it is in a Second Reading Committee. But it could be a lengthy Committee stage. There are a lot of interesting points which are not perhaps very exciting, but are of some importance.
Accordingly, I look forward to our discussions not in order to delay matters so that the Whips are afraid that the Bill will not get through, but to give these important matters the scrutiny that they deserve.

11.53 a.m.

Mr. Ivan Lawrence: That this Bill introduces improvements in the existing law there can be no doubt at all. That its preparation has been made with great care with the application of distinguished legal minds and after considerable consultation there is likewise no question for doubt. But the fact is that family law, as administered in this country, has for many years been developing into a quagmire and a mess. Whether it always benefits the lawyers to have the system so is open to doubt. However, it is quite clear that the consumers—the parties to matrimonial conflict—do not benefit from the system that we have been pursuing, as frequent and increasingly concerned inquiries, such as the Finer Committee report, have revealed.
How far the Bill helps, or ought to help, is a matter of considerable doubt. I do not think that any of us should consider it as being any more than a stopgap on the way to an overall improvement of the system.
The Under-Secretary of State, in support of the Bill, said that it incorporated the recommendations of the Law Commission. But that is only helpful to us as far as it goes since the Law Commission was expressly excluded from considering the very points that I am raising now and to which others have alluded—namely, the wider ramifications of this legislation.
The terms of reference of the Law Commission were to consider:

"(a) what changes in the matrimonial law administered by the magistrates' courts may be desirable as a result of the coming into operation of the Divorce Reform Act 1969 and the Matrimonial Proceedings and Property Act 1970, and
"(b) any other changes that may appear to be called for in related legislation in order to avoid the creation of anomalies."

Therefore, although the Law Commission recognised that there was a body of opinion that felt that more radical reform was necessary, it concluded that such matters were outside the working party's terms of reference. Therefore, one can consider this legislation as being no moe than making the best of a bad job.
The list of those who call for overall change daily grows longer. One can see from the figures that the number of people making application to the magistrates' courts for matrimonial and affiliation

orders has been decreasing. In 1973 there were 20,993 applications, and in 1976 there were 9,371 applications. Whether that is because solicitors are advising their clients that matrimonial proceedings in the magistrates' court are too old-fashioned and confused or the remedies which they provide are not particularly helpful, or whether it is because those who do not go to solicitors are advised by the Department of Health and Social Security that they should not apply for maintenance when they are in receipt of benefit, I do not think matters. What matters is that the system is increasingly being shown to be unhelpful to those consumers to whom it is directed.
It does not seem to me that a system which kills the patient more quickly than it helps the healing process is sensible in the long term. The magistrates' court is meant to be a first-aid stage. But if the marriage has not finally broken down when it goes to the magistrates' court, the proceedings in that court are likely to ensure that it does break down irrevocably. It is true that taking quarrels to court sometimes clears the air and results in reconciliation, but far more frequently than we perhaps appreciate it polarises conflict, bitterness and hostility and makes reconciliation impossible.
That fact was, of course, considered by the Law Commission. It put forward two arguments for saying that there should nevertheless be the finding of bad behaviour as a ground for a matrimonial offence giving access to the court. Neither of those two arguments for maintaining the matrimonial offence seems to me to have a great deal of substance.
First, the Law Commission posed the question: how else can a party get access to the court's reliefs unless he or she can hang the applications on the hook of the matrimonial offence? It does not seem to me to be a particularly wise comment upon the wit of man that we cannot devise another means to justify going to the court for security of maintenance other than to have to prove a matrimonial offence which polarises the bitterness and hostility which arises from such actions. Nor is that a justification or a help to the spouse who has separated by consent. He or she cannot get the help of the court by applying under matrimonial offences which do not apply in his or her particular case.
It does not seem a particularly praiseworthy or justifiable point to make that, if desertion is established in a magistrates' court, it will somehow be easier to establish desertion two years later when a divorce is applied for in the High Court. The reality is that there should be sufficient evidence of what has happened in the matrimonial situation over two years to establish desertion, and a finding in the magistrates' court is in practice of little help.
Therefore, I feel that it is a pity that the Law Commission should have lent its weight to maintaining, even in a modified form, the concept of the matrimonial offence. That merely keeps the old system going and makes this no more than a stopgap or first-aid that is likely to cause more harm than good to the marriage.
There is much meat in the Bill for us to chew over. Several important issues have already been highlighted by hon. Members, and I shall not repeat them. I welcome the Bill, but I think that it is a great pity that we cannot do the job properly while we are about it. In an age where the break-up of marriage seems to be the order of the day, it is sad that we in this place cannot introduce a system which will do something to improve the stability of marriage and family life rather than to introduce yet more legislation to speed and rationalise a system which, in the end, helps only to demolish the structure of the family and of marriage in this country.

12.2 p.m.

Mrs. Helene Hayman: It is an infrequent occurrence to find myself agreeing with nearly everything said by the hon. Member for Burton (Mr. Lawrence). Perhaps that is what Second Reading Committees are for.
We have had a great deal of common feeling in the debate. The welcome for what is being done has been there, but inevitably even greater than that welcome has been the disappointment about what is not being done.
The lack of a unified and humane system of legal procedures for people undergoing family disputes is a condemnation of the way in which we in this House and the courts are running our affairs. It is a great shame that we have

not taken the opportunity to be much more radical in our approach to the courts structure that deals with the matrimonial offence and domestic proceedings and the arrangements for maintenance.
As has been pointed out already, the use of magistrates' courts by the consumer in domestic proceedings is declining. None of us can say why that is with any degree of proof. My impression is that, since the Divorce Reform Act, the more drastic solution of divorce has been easier to obtain in surroundings less redolent of criminal proceedings and on the understanding that marriages can break up without there necessarily being a fault or offence on one person's part. While that level of solution is being offered by one set of courts, the courts which are meant to give first-aid to the casualty—in situations less drastic and where a break-up is not irrevocable—impose a bitter atmosphere on the parties who go to them.
It is a matter for disappointment that Clause 1 does not totally do away with the concept of the matrimonial offence. That concept still lingers in the provisions about desertion and failure to maintain. I hope that in Committee it will be possible to move even further away from the concept of offence than the Law Commission has recommended.
It is a shame, too, that there has not been a radical restructuring of maintenance and the collection of maintenance. This, of course, comes back to Finer. I understand very well that, without a system of a special allowance for one-parent families, it is difficult to bring in the administrative order system that I have recommended. Nevertheless, all of us time and again see the misery of women attempting to obtain maintenance through the magistrates' courts but failing to do so.
The Supplementary Benefits Commission has encouraged women to use the magistrates' court as an anvil on which to beat their husbands. There has been some improvement in that respect recently. Nevertheless this was an opportunity of looking at a better way of transferring that responsibility towards the SBC when it was maintaining rather than taking it away from the parties themselves. It is a shame that has not been done on


the day after a radical change in maintenance payments in the Budget, which seems to have been completely unnoticed by the Press, in regard to investment income surcharge. I think that should have been welcomed enormously by countless divorced and separated women for whom it has been an irritation as well as a hardship.

Mr. Edward Lyons: I entirely agree that it is a great improvement. My hon. Friend will understand that it applies only to maintenance orders over £2,000 a year. We are dealing with a magistrates' court in which such orders do not reach those limits.

Mrs. Hayman: I accept my hon. and learned Friend's point. I was making a more general point. For a divorced woman with four children, £2,000 a year in maintenance is not a vast sum on which investment income surcharge should be levied. However, Mr. Blenkinsop, I may be veering a little.
At the other end of the maintenance question one has the maintenance defaulter against whom an order has been made. Here, I echo everything said by my hon. Friend the Member for Barking (Miss Richardson). I cannot understand the logic behind imprisonment for maintenance debtors. We abolished imprisonment for other civil debtors. It is a totally archaic remnant that does nothing to help the families concerned.
The argument always is that the imprisonment rule is maintained for those who pay up on the threat of imprisonment. Many people are sent to prison every year for non-payment of maintenance. Earlier we talked of what was and what was not beyond the wit of man. If someone was found well enough to be threatened with imprisonment, it should be possible to find a method of distraint or attachment of earnings or some other way to get the money out of him.
Finally, I echo the point made by my hon. and learned Friend the Member for Bradford, West (Mr. Lyons) about affiliation proceedings. I recognise that the Bill cannot deal with the larger question of illegitimacy as a whole and what we ought to do about that matter. However, the Bill contains clauses which deal with affiliation proceedings.
The question of appeal from affiliation proceedings in the magistrates' court has

worried people working in this area for a long time. I take issue with my hon. and learned Friend about where the appeal should go. There is an argument between the Family Division and the county courts, but I think we are agreed that it should not be to the Crown Court. Perhaps we can return to this point in Committee.
I close by registering the disappointment that we feel in not seeing more progress towards what was a manifesto commitment to introduce family courts. I hope that the Bill, limited though it is in its scope, can be improved during its passage through the House.

12.10 p.m.

Dr. Summerskill: By leave of the Committee, I shall now reply to the debate and deal with points that have been made. Some were detailed Committee points, but others were more general. I am glad that there has been a welcome for the Bill as a whole, though I am conscious that there are many points which disturb hon. Members, and I shall try to clear some of them up.
The hon. Member for Chislehurst (Mr. Sims) asked how the domestic panels are to be appointed. The intention is that members of the panels should be chosen by individual benches but the Lord Chancellor will have a reserve power to appoint and remove panel members. The detailed provisions will be embodied in rules of court.
The hon. Member asked whether we favoured setting up application courts. This can be done by local initiative, I understand, and the Law Commission recommended against making statutory provision for it. As for simplified proceedings, the hon. Member was right in thinking that we shall deal with that recommendation by rules, so it is not provided for in the Bill.
The hon. Gentleman also asked about informal contacts with children by the magistrates. The Bill is silent on this point, but the President of the Family Division is on record as opposing this being done, and the Law Commission supported his view.
With regard to implementation of the Bill, the rules of court will have to be made first, which will take time, and a reasonable time will have to be allowed


for the courts to study the Act. Therefore, it is too early to say when exactly the Bill could be implemented.
The hon. and learned Member for Montgomery (Mr. Hooson) urged that we take out the words "right of" in Clause 7(2)(b), leaving simply "access". Right of access is a complicated matter but I am sure that this can be discussed in Committee, and I shall certainly consider the hon. and learned Member's case for omitting those words.
The hon. and learned Gentleman next mentioned split orders. It is sometimes suggested that it is undesirable for the courts to make orders of this kind, as he said, and they may lead to endless disputes which cause only harm to a child. The Law Commission considered this matter at great length but it did not contemplate that courts would commonly make orders of this kind and there is nothing in the Bill to suggest that they should. In many cases, the court may decide that the correct course is to give one party sole rights of legal custody to the exclusion of the other party, so the Bill is in accordance with the Law Commission's recommendations.
The Law Commission consulted judges, some of whom did not share the view of the hon. and learned Member on this subject. The provision in the Bill ensures that the parent who actually looks after the child must have legal custody and that the court has maximum discretion on what powers and duties should be exercised jointly.
On the ponts raised by my hon. Friend the Member for Barking (Miss Richardson) and the hon. Member for Burton (Mr. Lawrence), there appears to be some misunderstanding about the position where a couple decide to separate in an amicable way. As my hon. Friend the Member for Barking and several other hon. Members pointed out, this practice is increasingly common. If couples are merely living part, if there is no failure to maintain and the wife is receiving adequate maintenance, there is no problem and, presumably, no need for the courts to intervene. If there is a failure to maintain, then under Clause 1 application can be made for an order on the grounds of failure to provide reasonable maintenance.

Mrs. Hayman: The problem arises in a family where there has been an amicable separation or desertion, where maintenance is being paid at the moment and there is no failure to maintain, but where the wife in question understandably wishes to protect her position for the future and not be dependent on voluntary payments or payments at whim from the husband. In that circumstance, it is difficult to see how she could protect her future position as the Bill now stands.

Dr. Summerskill: This is the hypothetical case of a woman who is being adequately maintained, sitting around worrying about the time when she will not be adequately maintained.

Mrs. Hayman: That is right.

Dr. Summerskill: I can only say that when that time comes and she has a cause for complaint, she can then go to the courts and make application for an order to be maintained on the ground that she is not being maintained. I do not see a great difficulty here. Under Clause 6, she could get an agreement with her husband on a reasonable amount. If they can agree—which, presumably, is the case in this marriage—the court can make provision for obtaining an order for financial provision which has been agreed by the parties. That would put her mind at rest. She is then receiving money under an order, and is not receiving it on the generous whim of her husband. Therefore, that situation is covered in the Bill.
If the ground of unreasonable behaviour were cut out, a wife could not apply for an order before leaving her husband. Second, if the ground of desertion were cut out, the wife whose husband has left her but from whom she is obtaining regular payments could not obtain the extra security of an order. In these four groups in Clause 1 and in Clause 6, which is the agreed arrangement, one is covering every possible situation in which a woman might find herself.
My hon. Friends the Members for Barking and for Welwyn and Hatfield (Mrs. Hayman) are concerned that there are, in fact, too many grounds here. I think that they would like to cut out the last two. It seems to me that by having four grounds, Clause 1 makes it better for


the married woman in whatever position she happens to find herself. Clauses 1 and 6 cover all possible variations of her condition.
Several hon. Members have made reference to family courts. The Finer Committee rightly drew attention to the differences which exist between the separate but overlapping jurisdictions of the High Court and divorce county courts, on the one hand, and the magistrates' courts, on the other, and proposed that the present jurisdiction exercised by magistrates' courts should be removed from them and transferred to a family court based on the county court.
The Government made clear in another place that they see no prospect of accepting that recommendation. Our views on the subject were expressed by my right hon. and learned Friend the Attorney-General as long ago as November 1976, when he answered a Question in the House. He explained that in the present financial circumstances—and that is still the reason—there was no possibility of providing separate accommodation for family courts. He pointed out that the number of people with the necessary qualifications for appointment as circuit judges was limited—although there may be some volunteers in this Committee at the moment. There is a shortage of potential circuit judges.
The Finer Committee suggested in its report that the need for additional manpower and accommodation for the proposed family court could be met from existing resources. I am afraid that that was an optimistic assumption. There would need to be additional court accommodation as well as judges and staff.
Clause 75 goes some of the way to meet the Finer Committee's wishes. It provides for the setting up of specially appointed panels of justices to hear domestic cases. This, together with the provisions in the Bill relating to the privacy of domestic proceedings, will, I hope, help to ensure that matrimonial cases in magistrates' courts are heard in a more relaxed atmosphere, and that those hearing the cases are suitable for and experienced in this type of work.
Some hon. Members raised the question of the role of the Supplementary Benefits Commission in bringing proceedings. There is no power in the Bill for it

to do this. We have consulted my right hon. Friend the Secretary of State for Social Services, and the Department has given the information that, in the view of the Supplementary Benefits Commission, it is unusual for a woman who seeks variance of any maintenance order to refuse to take action of this nature when it is suggested to her by the Commission that there are good grounds for her to take proceedings. In the view of the Commission, and in its experience, the woman herself takes the proceedings.
The Department also says that to give the Commission such additional power might well be thought to be unwarranted intereference in the woman's right to decide for herself what action should be taken on a maintenance order which she herself has obtained. But a team of DHSS officials has for some time been working on a general review of the supplementary benefits scheme, and before long it will look at the general powers of the Commission for ensuring that relatives who are liable to maintain somebody discharge their duties as fully as possible.
My right hon. Friend has told me that it is not at all clear, from the information presently available, that the matter is likely to be so serious as to call for action on the lines suggested by hon. Members. He would prefer to await the results of the examination by the review team which he is setting up. If these show that some remedial action seems to be called for, he, in consultation with the Commission, will certainly consider the best form for the action to take.
The hon. Member for Burton asked whether the Bill is a stop-gap. I think that was the expression he used. I see that he has gone, but other Members have asked the same question: whether this measure relates to family courts The Attorney-General made it clear, as I have said, that he saw no prospect of bringing in family courts. But there is nothing inconsistent in reforming magistrates' courts matrimonial law in this Bill and setting up family courts at some time in the future. I think that the Finer Committee itself recognised this. Family courts need not be ruled out.
The hon. Member for Chislehurst asked for the justification for Clause 12. I have returned to this question because similar points were made by other members of the Committee. He alleged that time might


be wasted on a trivial dispute between parents. This provision corresponds to a provision already available in guardianship proceedings under the Guardianship Act 1973. The experience there is that there have been very few applications under this section, and no doubt the same will apply under the Bill.
Several hon. Members, including my hon. Friends the Members for Barking and for Welwyn and Hatfield, mentioned imprisonment of maintenance defaulters. The Home Office has a problem of prison overcrowding, and we certainly look at the question whether prisons should be used for this purpose very carefully from that point of view. It seems to be a weapon of last resort, in a sense, and also a deterrent. My hon. Friend the Member for Barking did not mention the deterrent aspect. This is difficult to prove or quantify, but the evidence we have suggests that there is a deterrent effect.
There are restrictions on the power to commit a maintenance defaulter to prison in the first place. The magistrates' court must first have inquired in the defaulter's presence whether the default was due to his wilful refusal or culpable neglect. It may not commit to prison if it is of the opinion that the default was not so due.
The court is also required to consider, before sentencing to imprisonment, whether an attachment of earnings order would be appropriate. The maximum term of imprisonment which may be imposed is only six weeks.
My hon. Friend was slightly wrong with her figures. The average daily population of these people in prison during 1976 was about 50. The total number of maintenance defaulters committed to prison by magistrates' courts in the whole of 1976 was 3,233. That is where, I think, she got her figure. The number of people actually in prison at any given moment is not all that great.
A number of defaulters pay up after they have been imprisoned, which is one way of ensuring their release, but there must be a deterrent aspect to this. It is often found that people do not pay until the very last minute when they can see that they are just about to be sent to prison.
A Home Office survey of six courts showed that in nearly 90 per cent. of the cases where the court issued a suspended committal warrant for maintenance default, which is the last resort, the defaulter did not actually reach prison and paid up.
My hon. Friend the Member for Barking asked why the Bill's provisions are different from those of the Domestic Violence Act. This follows the Law Commission again. Magistrates' court procedure is simpler than that of the High Court and county courts. The system of magistrates issuing warrants avoids the police being saddled with the decision on arrests. This can be done because there are 20,000 magistrates but relatively few judges.
There are no actual differences in the rights of hearing. Both the High Court and county courts under the Domestic Proceedings Act and magistrates under the Bill can make a protection order where they think there is imminent danger of physical injury.
Several hon. Members talked about the role of the Press in domestic proceedings, but I can only say that the Press may be present at domestic proceedings under existing law. This follows existing law, but whether the Committee feels that the existing law should be changed is presumably a matter to be discussed at further sittings, but this particular provision is not new.
The point made, again, by my hon. Friend the Member for Barking and by my hon. and learned Friend the Member for Bradford, West (Mr. Lyons)—he told me that he would have to leave—referred to affiliation proceedings. They argued that the Bill should reform the system of appeal from magistrates' decisions in affiliation cases. At present, appeals are by way of rehearing to the Crown Court. Appeals in other domestic cases are to the Divisional Court and are not by way of rehearing.
My hon. Friend the Member for Welwyn and Hatfield said, correctly, that the number of applicants to magistrates' courts is declining. The hon. Member for Burton said this as well, but he did not mention the increase in divorce which concurrently has taken place. He gave various other reasons but not that.
We cannot conclude, therefore, that magistrates' courts are unpopular because of their atmosphere or anything of that nature. That need not be the sole reason, and the hon. Member for Burton gave several reasons. The great increase in divorce arises for another reason.
The number of applications to magistrates' courts in guardianship proceedings, for instance, has not shown the same drop. It would seem that the explanation lies in the antiquated law applied in the magistrates' court.
I hope that this Bill, by bringing the law very realistically up to date in magistrates' courts and providing, in Clauses 1 and 6, for almost every possible situation

in which a married woman can find herself, will encourage more women to use the magistrates' court to obtain maintenance and custody of the children easily and cheaply.
On those grounds, I ask the Committee to accept the Bill.

Question put and agreed to.

Ordered,
That the Chairman do now report to the House that the Committee recommend that the Domestic Proceedings and Magistrates' Courts Bill [Lords] ought to be read a Second time.

Committee rose at twenty-nine minutes to One o'clock.

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE


Blenkinsop, Mr. Arthur (Chairman)
Lawrence, Mr.


Bates, Mr.
Lyons, Mr. Edward


Bottomley, Mr. Peter
Richardson, Miss


Bowden, Mr.
Sims, Mr.


Clegg, Mr.
Stradling, Mr. Thomas


Hayman, Mrs.
Summerskill, Dr.


Hooson, Mr.
Watkinson, Mr.


Hunt, Mr. David